Petition — Del Rio Distributors, Inc. v. Adolph Coors Co.

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78-1876

IN THE

Supreme Court of the United States

OCTOBER TERM, 1978

NO. 78-

DEL RIO DISTRIBUTORS, INC.,

Petitioner,

Vv.

ADOLPH COORS COMPANY,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

J AMES R. WARNCKE

1140 Milam Building

_ San Antonio, Texas 78205

(512) 227-6305

Attorney For Petitioner

Del Rio Distributors, Inc.

PRESS OF BYRON S. ADAMS PRINTING, INC., WASHINGTON, D.C.

TABLE OF CONTENTS

Page

Me. ib whic niwed Gan cess 4taaean

Se otis eck WA PTS Oe Obes ow he8

Eg) - Re a ee

UPR U EN oo aca in wens chen oHeeeeess

STAT eMeeee OP TH CCAGE 6 oi cc icccccccsccwes

REASONS FOR GRANTING THE WRIT..............

Ge a Oe a au Sao wi

APPENDIX A, Opinion of the United States Court of

Appeals for the Fifth Circuit, February 6, 1979. . .

APPENDIX B, Judgment of the United States Court

of Appeals for the Fifth Circuit, February 6, 1979.

APPENDIX C, Order of the United States Court of

Appeals for the Fifth Circuit Denying Petition for

Rehearing and Rehearing En Banc, May 7, 1979. .

APPENDIX D, Relevant Provisions of the 2Ist

Amendment to the Constitution of the United

States and of Section 1 of the Sherman Act......

APPENDIX E, Relevant Provisions of the Constitu-

tion of the State of Texas, Article 1, Section 26;

and of the Texas Business and Commerce Code,

Sections 15.01, 15.02, 15.03, 15.04 and 15.33; and

of the Texas Antitrust Statutes, Vernon's An-

notated Civil Statutes, Articles 7426, 7427, and

ees be SGivGiea se ces aie Wes ou bi oa ace @ ale d 2

APPENDIX F, Relevant Provisions of the Texas

Alcoholic Beverage Code, Section 102.51 .......

8a

9a

10a

TABLE OF AUTHORITIES

CASES: Page

Adolph Coors Company v. Federal Trade Commission, ©

497 F.2d 1178, cert. den. 419 U.S. 1105.......... 4,5

Burks v. Lasker, (May 14, 1979) __ U.S. __.......... 10

Burpee Tan Sealer Co. v. Henry McDonnell Co., (Tex.

Civ. App., 1934) 75 S.W. 2d 458, err. ref. ........ 7

Byrd v. Crazy Water Co., (Tex. Civ. App., 1940) 140

ft MRE a Oe ae a ee ee i 7

Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S.

36, 97S. Ct. 2549, 53 L.Ed. 2d 568 (1977) ...... 4,5,9

Copper Liquor Inc. v. Adolph Coors Company, 506

PE Ck Cesta cca tess ie Kehoe’ tee 4,5

E.F.1., Inc. v. Marketers Intern, Inc., (Tex. Civ. App.,

1973) 492 S.W. 2d 302, ref'd: n.r.e. 506 S.W. 2d

2 RCA AES ae ROO ee eee ee eds 7,9

Elray, Inc. v. Cathodic Protection Service, (Tex. Civ.

App. 1974) 507 S.W. 2d570............eececee 8

Fairfield County Beverage Distributors, Inc. v. Nar-

ragansett Brewing Company, (D.C., Conn., 1974)

I NS oe ras CREE Pe hiecenens Bema 9

Ford Motor Co. v. State, (Tex. Sup. Ct., 1943) 175

NE EES is ab WN ae bs eR eee eee 7

Jackson Brewing Co. v. Clarke, (Tex. Civ. App., 1964)

ik OR Rg OD ee 7

Joseph E. Seagram & Sons v. Hostetter, (1966) 384

U.S. 35, 86S. Ct. 1254, 16 L.Ed. 2d 336, and cases

cited therein at page 42, 384 U.S. .............. 9

Kelly v. Bryson Pipeline & Refining Co., (Tex. Civ.

a errr 7

Lamp Liquors, Inc. v. Adolph Coors Company, (D.C.,

Wy., 1976) 410 F.Supp. 536, reversed on other

IE GT UO bok seca cine sv oeiedcisen’s 9

Mathews Conveyor Co. v. Palmer-Bee Co., (6th Cir.,

kL Rr rere arn Gare Core 8

ill

Page

McKinney v. Landon, (8th Cir., 1913) 209 F. 300... .. 8

Newby v. W. T. Raleigh Co., (Tex. Civ. App., 1917) 194

UNE CRLUE VincG web ba dc rksern be «heehee pias 7

Patrizi v. McAninch, (Tex. Sup. Ct., 1954) 296 S.W. 2d

ee eee eee Sia \ tee Cpe eRe tek kan kao 7

Standard Oil Co. of Kentucky v. Tennessee, (1910) 217

U.S. 413, 30S. Ct. 543, 54 L.Ed. 817. ........... 8

State v. Southeast Tex. Chap. of Nat. Elec. Con.

Ass'n., (Tex. Civ. App., 1962) 358 S.W. 2d 711,

ref'd. n.r.e., cert. den. 372 U.S. 965............. 9

U.S. v. Kimbell Foods, Inc., (April 2, 1979) __ U.S. _,

7 eer’ SM Se Fk) eee 10

United States v. Arnold, Schwinn & Co., 388 U.S. 365,

87S. Ct. 1856, 18 L.Ed 2d 1249 (1967).......... 4,9

W. T. Raleigh Co. v. Land, (Tex. Sup. Ct., 1926) 279

Le cat ioe rnd ics Sales wate we aie 7

Woods Exploration & Pro. Co. v. Aluminum Co. of

Amer., (5th Cir., 1971) 478 F.2d 1268, cert. den.

EG oo alae 8

STATUTES: Page

21st Amendment to the Constitution of the United

+ area CAP KGS NIRS CURD ne eS Hae eo 2

Constitution of the State of Texas, Article 1, Section

aia shes gee ee Pe one ee rae —&

Sherman Act, Section 1, 26 Stat. 209 (1890), 15

Gets WIR oc nc acai aha ww on wie 2, 3,6, 8,9, 10, 11

Texas Alcoholic Beverage Control Act, Section 102.51 7

Texas Business and Commerce Code, Sections 15.01,

DOGS, 26.08. 14.06, Gee 15.38... wa cc wet cacwcan ee

Vernon’s Annotated Civil Statutes, Articles 7426,

Pe er ang sae 2

IN THE

Supreme Court of the Wnited States

OCTOBER TERM, 1978

NO. 78-

DEL RIO DISTRIBUTORS, INC.

V.

ADOLPH COORS COMPANY,

’ Petitioner,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

Del Rio Distributors, Inc., petitions for writ of cer-

tiorari to review the judgment of the United States

Court of Appeals for the Fifth Circuit in this case.

OPINIONS BELOW

The District Court wrote no opinion in this case.

The opinion of the United States Court of Appeals for

the Fifth Circuit is annexed hereto as Appendix A

and is reported at 589 F.2d 176.

JURISDICTION

The Judgment of the Court of Appeals was entered

on February 6, 1979, and is annexed hereto as Appen-

dix B. A timely Petition for Rehearing and Rehearing

En Banc was denied on May 7, 1979, by order annexed

as Appendix C. The jurisdiction of this Court is in-

voked under 28 U.S.C., $1254(1).

QUESTION PRESENTED

Whether a restraint of trade (vertical territorial re-

striction) imposed by a manufacturer upon its distrib-

utor, wholly within the boundaries of a state, can be

reasonable under the Sherman Act rule of reason,

when such restraint constitutes a per se felony viola-:

tion of the antitrust law of the state wherein it is

imposed; or, whether same must be unlawful as a

matter of law.'

STATUTES INVOLVED

The relevant provisions of the 21st Amendment to

the Constitution and of Section 1 of the Sherman Act,

$1, 26 Stat. 209 (1890), 15 U.S.C. $1, involved in this

case, are set forth in Appendix D. The relevant pro-

visions of the Texas Constitution and Texas antitrust

statutes involved in this case, Article 1, §26 Consti-

tution of the State of Texas, and Sections 15.01, 15.02,

15.03, 15.04, and 15.33 of the Texas Business and

Commerce Code, in effect from September 1, 1967,

and Articles 7426, 7427, and 7428, Vernon's Annotat-

ed Civil Statutes of the State of Texas, in effect prior

to September 1, 1967, are set forth in Appendix E.

STATEMENT OF THE CASE

Petitioner, Plaintiff below, Del Rio Distributors,

' Subsidiary to this question is the further question whether

the federal antitrust laws preempt state antitrust laws concern-

ing a restraint of trade imposed wholly within the state in ques-

tion and, if so, whether that preemption still obtains over com-

merce in alcoholic beverages in view of the 21st Amendment to

the Constitution.

Inc. (Del Rio), commenced business in December,

1966, as the exclusive distributor for the Respondent,

Defendant below, Adolph Coors Company (Coors), in

ten Texas counties, including and surrounding Del

Rio, Texas. Coors brewed its beer in Colorado and

shipped it to Del Rio in Texas.

It is undisputed that, while Del Rio served as

Coors’ distributor, and until terminated as such by

Coors, Del Rio was restricted by Coors to wholesaling

its beer solely within its designated ten county area

of Texas. Coors beer had not been distributed in Del

Rio's territory prior to its commencement of business

in that area. Del Rio, in plowing the virgin soil for

Coors beer, operated at a loss until the year 1971,

when it first showed a profit. At that time, Coors

notified Del Rio that it was to be terminated as its

distributor, which termination finally became effec-

tive December 1, 1971, at which time Del Rio went

out of business.

This action was instituted by Del Rio against Coors

in the United States District Court for the Midland-

Odessa Division of the Western District of Texas, on

April 26, 1972. In its complaint, Del Rio claimed tre-

ble damages under the Clayton Act for violations of

Section | of the Sherman Act by Coors in imposing

vertical territorial restrictions upon it, fixing its

prices and wrongfully terminating Del Rio as its dis-

tributor to insure enforcement of its territorial restric-

tions and price-fixing activities.

Del Rio’s original complaint contained a pendent

claim under the antitrust laws of the State of Texas.

This pendent claim was abandoned by Del Rio in the

pre-trial order, dated February 25, 1977, to induce

Coors to agree to its entry.’ Del Rio further moved

the District Court to take judicial notice of the rulings

in Copper Liquor, Inc. v. Adolph Coors Company and

Adolph Coors Company v. Federal Trade Commission,

497 F. 2d 1178, cert. den. 419 U.S. 1105, wherein it

was decided that Coors’ territorial restrictions were a

per se violation of the Sherman Act and that it had

further violated that Act in imposing retail and whole-

sale price-fixing. The pre-trial order presented Del

Rio's contention that Coors’ territorial restrictions

constituted a per se viclation and that Coors was

further collaterally estopped on the question of liabil-

ity under the decisions in Copper Liquor and the

F.T.C. cases.

After having prepared for trial for some five years

under the settled law that territorial restrictions were

per se illegal, Del Rio proceeded to trial before a jury

in Midland, Texas, on the 20th day of June, 1977. Del

Rio rested its case on June 23, 1977, the same day

this Court handed down its ruling in Continental T. V.,

Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S. Ct. 2549,

53 L. Ed. 2d 568 (1977), overruling the per se Schwinn

rule and reinstating the ‘rule of reason’’ under the

Sherman Act for territorial restraints.

‘Although it has long been clearly decided that territorial

restrictions constituted a per se violation of the Texas antitrust

laws, the Texas law allowed only single rather than treble dam-

ages, and, in view of the Fifth Circuit's ruling in Copper Liquor,

Inc. v. Adolph Coors Company, 506 F.2d 934, wherein it was

held that under the rule of United States v. Arnold, Schwinn &

Co., 388 U.S. 365, 87 S. Ct. 1856, 18 L. Ed. 2d 1249 (1967),

territorial restrictions were a per se violation of the Sherman

Act, Del Rio saw nothing to be gained by insisting upon a con-

tinuance of its pendent claim under the Texas antitrust laws.

After, and in view of, this Court’s ruling in

Sylvania, Dei Rio sought to enlarge the pre-trial order

to reinstate its pendent claim under the Texas anti-

trust laws, which was denied by the District Court.

Del Rio submitted its memorandum brief to the Dis-

trict Court on the question that territorial restrictions

were a per se violation of the Texas antitrust laws.

Del Rio also sought jury instructions in connection

with the Court’s charge on the rule of reason to the

effect: (Pltf. Req. Inst. No. 28) that Coors’ territorial

restrictions were a per se violation of the antitrust

laws of the State of Texas; and (Pltf. Req. Inst. No.

34) that if Coors employed its territorial restrictions

as an aid to enforce price-fixing activities, that such

would be unreasonable as a matter of law.’ These

requested jury instructions were refused by the trial

court. Del Rio also asked that interrogatories posed

to the jury, inquiring whether or not Coors fixed

prices or that its territorial restrictions were unrea-

sonable, be submitted to the jury unconditionally.

However, the District Court submitted them only con-

ditioned upon the jury’s bringing in a general verdict

for Del Rio in the first instance.

After a general verdict for the Defendant, Coors,

Del Rio moved for judgment n.o.v., on the ground

that Coors’ territorial restrictions were per se illegal

under the Sherman Act as being in violation of the

Texas antitrust laws and, secondly, on the ground

that Coors was collaterally estopped under the Copper

Liquor and F.7.C. decisions. Alternately, Del Rio

‘William Kisler Coors, Coors’ highest officer, testified that a

purpose of the territorial restrictions was to insure that Coors’

pricing structures were adhered to. (Tr., Vol. Il, pp. 135, Coors

Dep., pp. 20, 21.)

moved for a new trial, upon the grounds, among many

others, that it should be granted a new trial in the

interest of fairness and justice to permit it to prepare

and present its case under the rule of reason, in view

of the fact that the law had been changed on Del Rio

in the middle of the trial and without opportunity to

prepare and present a rule of reason case. These mo-

tions were denied.

Upon appeal to the Fifth Circuit, Del Rio presented,

as its first and primary point, the contention that,

since Coors’ territorial restrictions constituted a per

se felony violation of the Texas antitrust laws, same

must be unreasonable as a matter of law and a per se

violation of the Sherman Act. The Court of Appeals

overruled this, as well as Del Rio’s other points on

appeal, and affirmed the District Court’s take nothing

judgment against Del Rio in an opinion completely

ignoring and avoiding any reference to the fact that

Del Rio's primary contention on appeal was that

Coors’ territorial restrictions must be unreasonable

and illegal per se as violative of the Texas antitrust

laws and the public policy of the State of Texas. Del

Rio's Petition for Rehearing was overruled without

opinion by the Court of Appeals.

REASONS FOR GRANTING THE WRIT

Whether a restraint on trade can or cannot be rea-

sonable under the Sherman Act rule of reason, when

same is a per se violation of the state antitrust law

wherein it is imposed, is an important question of

federal law which has not been, but should be, settled

by this Court.

It is, and has been, long and well decided in the

State of Texas that vertical territorial restrictions

imposed therein upon a distributor by a manufacturer

are per se violations of the Texas antitrust law.‘ Ar-

ticle 1, $26, Constitution of the State of Texas; Sec-

tions 15.01, 15.02, 15.03, 15.04, and 15.33, Texas Busi-

ness and Commerce Code; Patrizi v. McAninch (Tex.

Sup. Ct., 1954) 296 S.W. 2d 343; Ford Motor Co. v.

State (Tex. Sup. Ct., 1943) 175 S.W. 2d 230; W. T

Raleigh Co. v. Land (Tex. Sup. Ct., 1926) 279 S.W.

810; E.F.1., Inc. v. Marketers Intern., Inc. (Tex. Civ.

App., 1973) 492 S.W. 2d 302, ref'd. n.r.e. 506 S.W. 2d

579; Jackson Brewing Co. v. Clarke (Tex. Civ. App..,

1964) 375 S.W. 2d 352, ref’d. n.r.e.; Kelly v. Bryson

Pipeline & Refining Co. (Tex. Civ. App., 1942) 163

S.W. 2d 413; Byrd v. Crazy Water Co. (Tex. Civ. App.,

1940) 140 S.W. 2d 334; Burpee Tan Sealer Co. v.

Henry McDonnell Co. (Tex. Civ. App., 1934) 75 S.W.

2d 458, err. ref.; Newby v. W. T. Raleigh Co. (Tex.

Civ. App., 1917) 194 S.W. 1173.

‘Coors conceded this in its response to Del Rio's Petition for

Rehearing, wherein it stated, at page 9, ‘The Texas cases and

the state statutory provision cited by Del Rio *** seem to imply

that all territorial restrictions violate the Texas antitrust laws

and constitute a felony.’ Thereafter, Coors cited as an exception

to this rule, $102.51 of the Texas Alcoholic Beverage Control

Act (the provisions of which are set forth in Appendix F), which

require manufacturers of beer products to designate territorial

limits for their distributors. However, this Act was not enacted

until 1975, almost four years after Del Rio was terminated as a

Coors distributor and accordingly, has no application herein. In

any event, even were it applicable, such Act would grant no

refuge to Coors, since, by its terms, such territorial limits must

be ‘‘non-exclusive,"’ whereas the territorial restrictions estab-

lished by Coors, granted to Del Rio, and each of its other dis-

tributors, an exclusive franchise to distribute within their des-

ignated territory.

Since the Court of Appeals failed to make any ref-

erence to this point in its opinion (as though it did not

exist) it naturally stated no reason why such point

was overruled. The Fifth Circuit did, however, make

reference to the fact that Del Rio abandoned its pen-

dent claim under the Texas antitrust laws. Neverthe-

less, Del Rio did not waive any effect that the Texas

antitrust laws may have upon the Sherman Act under

the rule of reason. Rather, the same was timely and

properly brought to the attention of the District

Court by trial brief and requested jury instructions,

during the trial, and by motion for judgment n.o.v.

after the jury verdict.

In the Fifth Circuit, Coors did advance the argu-

ment that the Texas antitrust laws had been preempt-

ed by the federal antitrust laws. It is hard to believe

that the Court of Appeals followed this reasoning,

since that circuit had expressly held, in Woods Explo-

ration & Pro. Co. v. Aluminum Co. of Amer. (5th Cir.,

1971) 478 F. 2d 1268, cert. den. 423 U.S. 833, that the

federal laws did not preempt the state, and that both

complemented each other. The same conclusion was

reached earlier in Mathews Conveyor Co. v. Palmer-

Bee Co. (6th Cir., 1943) 1385 F.2d 73; McKinney v.

Landon (8th Cir., 1913) 209 F. 300. So far as Del Rio

can determine, this Court has never expressly ruled

on this point, but its decision in Standard Oil Co. of

Kentucky v. Tennessee (1910) 217 U.S. 413, 30 S. Ct.

543, 54 L. Ed. 817, has declared that the federal gov-

ernment has not preempted the right of state govern-

ments to regulate trade and commerce within their

boundaries. Likewise, the Texas courts have uniform-

ly held that the federal did not preempt the state

antitrust laws. Elray, Inc. v. Cathodic Protection Ser-

vice (Tex. Civ. App., 1974) 507 S.W. 2d 570; E.F.L,

Inc. v. Marketers Intern., Inc., supra.; and State v.

Southeast Tex. Chap. of Nat. Elec. Con. Ass'n (Tex.

Civ. App., 1962) 358 S.W. 2d 711, ref’d. n.r.e., cert.

den. 372 U.S. 965. In any case, if such preemption

existed generally, it should not apply here where the

field of commerce concerns alcoholic beverages, the

regulation of which has been left to the states by the

21st Amendment, as held in Lamp Liquors, Inc. v.

Adolph Coors Company (D.C., Wy., 1976) 410 F.

Supp. 536, reversed on other grounds, 563 F. 2d 425;

Fairfield County Beverage Distributors, Inc. v. Nar-

ragansett Brewing Company (D.C., Conn., 1974) 378

F. Supp. 376. This Court repeatedly has held that the

states are unconfined in the regulation of intoxicants

within their borders. Joseph E. Seagram & Sons v.

Hostetter (1966) 384 U.S. 35, 86S. Ct. 1254, 16 L. Ed.

2d 336, and cases cited therein at page 42, 384 U.S.

Furthermore, there is nothing inconsistent between

Texas’ antitrust prohibition against territorial re-

straints and Section 1 of the Sherman Act as inter-

preted by this Court. In fact, from 1967, when this

Court adopted the Schwinn rule, until 1977, when it

made its Sylvania ruling, the law of both jurisdictions

condemned territorial restraints as per se violations.

Certainly, the Sylvania ruling did not hold that. terri-

torial restrictions were per se legal, but rather, held

that the legality of same must be judged by the rule

of reason. Therefore, Del Rio submits that the over-

ruling of this point by the Court of Appeals cannot

be sustained on any theory of federal preemption.

In deciding the legality of a territorial restriction

under the rule of reason, as we must under Sylvania,

10

we must look at the particular facts and circumstan-

ces of the particular case under review. Del Rio sub-

mits that the fact and circumstance that the conduct

under scrutiny constitutes a per se felony violation of

the Texas antitrust laws must predominate so as to

render these restrictions unreasonable and illegal per

se under the Sherman Act. In applying a federal rule

that has no federal standard engrafted upon it to give

it certainty, such as a rule of reason inquiry, one

should look to the state law to determine the state

standard, as this Court has recently done in Burks v.

Lasker (May 14, 1979) _____ U.S. ____ and U.S. v. Kim-

bell Foods, Inc. (April 2, 1979) __. U.S. , 99 S.

Ct. 1448, 59 L. Ed. 2d 711.

The irrefutability and correctness of Del Rio's con-

tention, that Coors’ territorial restrictions must be

per se illegal under the rule of reason when same

constitute a per se felony violation of the state anti-

trust laws, is most glaringly demonstrated by the fact

that the Court of Appeals, in overruling Del Rio's

contention, was totally unable to express any justifi-

cation for its action and was compelled to write its

opinion as though this point was not even in the case,

even though it was the first and primary point urged

on appeal and the main one addressed on oral argu-

ment and pointed out upon rehearing before the Court

of Appeals. The conduct of the Court of Appeals, in

attempting to ignore Del Rio's primary point before

it, more closely fits the rule of men, than the rule of

law.

To hold that it was reasonable under the federal

antitrust law to commit a restraint of trade that was

a per se felony violation, in the state where commit-

1]

ted, of the very law of that state designed to prevent

restraints of trade in commerce, would undoubtedly

be one of the most preposterous decisions handed

down in our language.

The dignity and efficacy of the antitrust laws of

every state in the Union weigh in the balance of this

appeal.

CONCLUSION

This petition for writ of certiorari should be granted

to decide this important Sherman Act question and

in the interest of justice.

Respectfully submitted,

JAMES R. WARNCKE

1140 Milam Building

San Antonio, Texas 78205

(512) 227-6305

Attorney For Petitioner

Del Rio Distributors, Ine.

APPENDIX

la

APPENDIX A

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

No. 77-2811

DEL RIO DISTRIBUTING, INC.,

Plaintiff-Appellant,

Vv.

ADOLPH COORS COMPANY,

Defendant-Appellee.

Appeal from the United States District Court for the

Western District of Texas.

Before GEWIN, RONEY and GEE, Circuit Judges.

GEWIN, Circuit Judge:

Del Rio appeals from the jury's finding that Coors had

not violated the Sherman Act. Appellant raises several

issues for review. First, the refusal of the trial court to

enlarge the pretrial order by adding a count based on al-

leged state antitrust violations. Second, the court's refusal

to grant a new trial because of a change in the applicable

law during trial or because the verdict was against the

weight of the evidence. Third, appellant contends that the

doctrine of collateral estoppel should apply to the issue of

liability. Finally, appellant cites the court's refusal to give

certain special instructions that it had requested. After

carefully viewing the voluminous record, we find no merit

in the issues raised. The decision is affirmed.

In 1972, appellant Del Rio initiated a suit against the

Adolph Coors Company alleging violations of the Sherman

2a

Act and Texas antitrust laws. The alleged violations were

the fixing of wholesale and retail prices and the limiting of

territories where Coors beer could be resold. Del Rio had

begun operation as a distributor of appellee’s beer in Del

Rio, Texas in December, 1966 and continued until Coors

terminated the distributorship and it went out of business

on December 1, 1971. Appellant sought damages for lost

profits that it alleged would have been gained by the free-

dom to sell the beer without territorial and price restric-

tions and for loss of value of a going concern or goodwill

by reason of being terminated by appellee to ensure en-

forcement of those restrictions.

On October 7, 1975, a Pre-Trial Conference was held,

and shortly thereafter a Pre-Trial Order was submitted

indicating that Del Rio was abandoning its claims under

the Texas antitrust laws. The claim was expressly aban-

doned in the final Amended Pre-Trial Order in 1977.

The trial was commenced on June 20, 1977 with appel-

lant presenting its case under the territorial per se

Schwinn Rule.' On June 23 Del Rio rested its case. That

same day the Supreme Court handed down Continental T.

V. Inc. v. GTE Sylvania Inc., 433 U.S. 36, 97 S.Ct. 2549,

53 L.Ed.2d 568 (1977), overruling the Schwinn per se rule

and reinstating the ‘‘rule of reason.’’ Thereafter, appellant

moved to amend the Pre-Trial Order in an effort to rein-

state its claim under the Texas antitrust laws.’ The court

denied this motion. The jury returned the verdict for ap-

pellee Coors and appellant filed motions for Judgment

N.O.V. or alternatively for a new trial. Del Rio appealed

' United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87

S.Ct. 1856, 18 L.Ed.2d 1249 (1967).

* During oral argument, in response to a question by the court,

counsel for appellant stated that he did not move to reopen his

case after Sylvania was decided because he did not have

sufficient time to prepare a rule of reason case. Appellant also

did not move for a continuance. ,

3a

from the denial of those motions.

Appellant contends that the court erred in refusing to

allow the pretrial order to be enlarged to add a count based

on Texas antitrust violations. This court has previously

recognized that the trial judge is vested with broad dis-

cretion in determining whether or not a pre-trial order

should be modified or amended. In Sherman v. United

States, 462 F.2d 577, 579 (5th Cir. 1972) the court stated:

The trial judge is vested with broad discretion to

preserve the integrity and purpose of a pre-trial order.

Basically, these orders and stipulations, freely and

fairly entered into, are not to be set aside except to

avoid manifest injustice.

This position is consistent with the relevant language in

Rule 16 of the Federal Rules of Civil Procedure.

Del Rio does not dispute that it clearly waived any claim

that it might have had under Texas antitrust laws. The

facts necessary to support Del Rio’s claim under the Texas

antitrust laws could have been discovered prior to the Pre-

Trial Conference. However, appellant chose to abandon its

claim under Texas antitrust laws and has failed to estab-

lish that the trial court abused its discretion. Bettes v.

Stonewall Insurance Co., 480 F.2d 92 (5th Cir. 1973).

As a corollary to appellant’s contention that the court

should have enlarged the pre-trial order, appellant also

contends that the court erred in refusing to grant a new

trial. Again Del Rio’s argument is based on its reliance

that the decision would be rendered under the Schwinn per

se doctrine and in line with Copper Liquor, Inc. v. Adolph

Coors Co., 506 F.2d 934 (5th Cir. 1975).

Under Rule 59(a) of the Federal Rules of Civil Procedure

a new trial may be granted where the action has been tried

by a jury ‘“‘for any of the reasons for which new trials have

heretofore been granted in actions at law in the courts of

4a

the United States.”

The only authority the appellant cites for its position is

Hampton v. Graff Vending Co., 516 F.2d 100 (5th Cir.

1975) where this circuit remanded that case because of a

change in the law of this circuit between the first and

second appeals. In contrast, the change in the law in the

instant case occurred during the trial because of a decision

of the Supreme Court. Although, on its face, a remand

might appear more compelling, there are several factors

that distinguish the case at bar from Hampton.

First, appellant made a voluntary waiver of any claim it

might have had based on any alleged state antitrust vio-

lations. This waiver occurred after the Supreme Court had

granted certiorari in the Sylvania case. Thus, the argument

of surprise carries less weight. Finally, appellant has failed

to establish that any manifest injustice occurred because

of the continuation of the trial.’

Del Rio contends that adverse judgments entered

against Coors in Adolph Coors Co. v. Federal Trade Com-

mission, 497 F.2d 1178 (10th Cir. 1974), and Copper Liq-

uor, Inc. v. Adolph Coors Co., 506 F.2d 934 (5th Cir. 1975)

serve as collateral estoppel on the issue of liability.‘ We

disagree and find several bases for distinguishing those

cases. One of the most obvious distinctions of Copper Liq-

‘In commenting on Rule 59, Wright and Miller has observed:

Rule 59 gives the trial judge ample power to prevent what

he considers to be a miscarriage of justice. . . . Courts do not

grant new trials unless it is reasonably clear that prejudicial

error has crept into the record or that substantial justice

has not been done, and the burden of showing harmful error

rests on the party seeking the new trial. Ultimately the

motion invokes the sound discretion of the trial court, and

appellate review of its ruling is quite limited.

11 Wright & Miller, Federal Practice & Procedure § 2803, at 31-

33 (3d ed. 1973).

5a

uor is that it was decided under the per se rule of Schwinn

that has now been replaced by the rule of reason under

Sylvania.

The F.T.C. case, decided in another circuit, was based

on an appeal of an F.T.C. cease and desist order brought

under § 5 of the Federal Trade Commission Act. The Fed-

eral Trade Commission had over-turned the decision of an

administrative law judge who had found no violation of

the act. In reaching its decision on vertically imposed ter-

ritorial restrictions, the Tenth Circuit was compelled to

rely on law in effect at that time; the Schwinn per se rule.

In light of the reliance on Schwinn in both Copper Liquor

and the F.T.C. case we hold that the doctrine of collateral

estoppel has no application in the instant case.

Del Rio further argues that the verdict was against the

weight of the evidence. However, a perusal of the records

reveals that there was ample evidence from which the jury

could have reasonably concluded that Coors’ territorial

restrictions were reasonable and that Coors did not engage

in retail and wholesale price fixing.

Several witnesses testified that territories were essential

to maintaining quality control and service in the retail

market. There was a good deal of testimony concerning

Coors’ unique brewing process and the necessity for refrig-

eration and regular stock rotation to ensure quality and

flavor maintenance. Also, one of the expert witnesses tes-

tified that by assigning exclusive distributorships, there

was a long-term effect of making each distributorship

stronger, better able to compete with other brands and

provide better service. While appellee concedes that the

‘We also find that the trial judge did not err in refusing to

take judicial notice of Adolph Coors Co. v. Federal Trade Com-

mission, 497 F.2d 1178 (10th Cir. 1974) or in refusing to enter

into evidence the F.T.C. Complaint and the F.T.C. Cease and

Desist Order. Trial Record Vol. IV, pp. 235-37.

6a

evidence related to price fixing is sharply divided, there

was testimony upon which the jury could have concluded

that Coors was not guilty ot price fixing.

The final allegation of Del Rio relates to the court’s

refusal to give to the jury certain special instructions re-

quested by appellant and the use of two general verdict

forms and four interrogatories to be answered in the event

a verdict was returned for Del Rio. A careful scrutiny of

the entire jury charge establishes that the jury was prop-

erly advised on the applicable law. The use of interroga-

tories in conjunction with general verdict forms is consist-

ent with Rule 49(b) of the Federal Rules of Civil Procedure.

Thus, we find no merit in Del Rio’s allegations of error.

Having carefully considered each of the issues raised on

appeal and finding no merit in them, the judgment is AF-

FIRMED.

\

7a

APPENDIX B

UNITED STATES COURT OF APPEALS

No. 77-2811

D. C. Docket No. MO-72-CA-34

DEL RIO DISTRIBUTING, INC.,

Plaintiff-Appellant,

Vv.

ADOLPH Coors COMPANY,

Defendant-Appellee.

Appeal from the United States District Court for the

Wesiern District of Texas

Before GEWIN, RONEY and GEE, Circuit Judges.

Judgment

This cause came on to be heard on the transcript of the

record from the United States District Court for the West-

ern District of Texas, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here ordered

and adjudged by this Court that the judgment of the said

District Court in this cause be, and the same is hereby,

affirmed;

It if further ordered that the plaintiff-appellant pay to

the defendant-appellee the costs on appeal, to be taxed by

the Clerk of this Court.

February 6, 1979

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APPENDIX C

UNITED STATES COURT OF APPEALS

FIFTH CIRCUIT

OFFICE OF THE CLERK

May 7, 1979

To ALL PARTIES LISTED BELOW:

No. 77-2811 - Del Rio Distributing, Inc. vs. Adolph Coors

Co.

Dear Counsel:

This is to advise that an order has this day been entered

denying the petition ( _) for rehearing, and no member

of the panel nor Judge in regular active service on the

Court having requested that the Court be polled on re-

hearing en banc (Rule 35, Federal Rules of Appellate Pro-

cedure; Local Fifth Circuit Rule 16) the petition( _) for

rehearing en banc has also been denied.

See Rule 41, Federal Rules of Appellate Procedure for

issuance and stay of the mandate.

Very truly yours,

EDWARD W. WADSWORTH, Clerk

By Rosalie C. Vasino /s/

Deputy Clerk

9a

APPENDIX D

Relevant provisions of the 21st Amendment to the Con-

stitution of the United States:

‘Sec. 2. The transportation or importation into any

State, Territory, or possession of the United States

for delivery or use therein of intoxicating liquors, in

violation of the laws thereof, is hereby prohibited.”

Relevant provisions of Section 1 of the Sherman Act,

§1, 26 Stav. 209 (1890), 15 U.S.C. $1:

“Every contract, combination in the form of

trust or otherwise, or conspiracy, in restraint of trade

or commerce among the several States, or with foreign

nations, is declared to be illegal.”’

10a

APPENDIX E

Article 1, Section 26, of the Texas Constitution provides:

‘‘Perpetutities and monopolies are contrary to the ge-

nius of a free government, and shall never be allowed,

nor shall the law of primogeniture or entailments ever

be enforced in this State.”’

Texas Business And Commerce Code (Effective

September 1, 1967)

Section 15.01. Monopoly Defined

A “monopoly” is a combination or consolidation of two

or more corporations effected by

(1) bringing the direction of their affairs under com-

mon management or control to create, or where

the common management or control tends to cre-

ate, a trust as defined in Section 15.02 of this code;

or

(2) one corporation acquiring (in whole or part and

whether directly, through trustees, or otherwise)

the stock, bonds, franchise or other rights, or

physical property of one or more other corpora-

tions to prevent or lessen, or where the acquisition

tends to prevent or lessen, competition.

(R.S. Art. 7427; P.C. Art. 1633.)

Acts 1967, 60th Leg., vol. 2, p. 2343, ch. 785, § 1.

$15.02. Trust Defined

(a) In this section, unless the context requires a differ-

ent definition, “‘person’’ does not include municipal cor-

poration. (No source citation.)

(b) A “‘trust’’ is a combination of capital, skill, or acts

by two or more persons to

(1) restrict, or tend to restrict, trade, commerce, aids

to commerce, the preparation of tangible personal

|

lla

property for market or transportation, or the free

pursuit of a lawful business; or

(2) fix, maintain, increase, or reduce the price of tan-

gible personal property, the cost of insurance, or

the cost of preparing tangible personal property

for market or transportation; or

(3) prevent or lessen competition in

(A) the manufacture, transportation, sale, or pur-

chase of tangible personal property;

(B) the business of insurance;

(C) aids to commerce; or

(D) preparing tangible personal property for mar-

ket or transportation; or

(4) affect, control, or establish the price of tangible

personal property, or the cost of transportation,

insurance, or preparing tangible personal property

for market or transportation; or

(5) agree

(A) not to sell, dispose of, transport, or prepare

tangible personal property for market or trans-

portation, or not to make an insurance con-

tract, at a price below a common standard or

figure;

(B) to maintain the price of tangible personal prop-

erty, the charge for transportation or insur-

ance, or the cost of preparing tangible personal

property for market or transportation at a

fixed or graded figure;

(C) to affect or maintain the price of tangible per-

sonal property or the cost of transportation,

insurance, or preparing tangible personal prop-

erty for market or transportation in order to

J

12a 13a

preclude free competition between or among (2) two or more persons to agree to boycott, or threat-

themselves or others in the sale or transpor- en not to buy from or sell to, a person because

tation of tangible personal property, in the that person buys from or sells to another person;

business of transportation or insurance, or in (R.S. Art. 7428, subdiv. 1 and 2; P.C. Art. 1634,

preparing tangible personal property for mar- subdiv. 1 and 2.)

ket or transportation; or

(3) two or more persons to agree to boycott, or not to

(D) to pool, combine, or unite an interest they have deal with, the tangible personal property of anoth-

in the sale or purchase of tangible personal er person; or (R.S. Art. 7428, subdiv. 3 (part), amd.

property, or in the charge for transportation, by 50th Legis., Ch. 310, Sec. 1; P.C. Art. 1634,

insurance, or preparing tangible personal prop- subdiv. 3 (part), amd. by 50th Legis., Ch. 309, Sec.

erty for market or transportation, so that the 1.)

price of the tangible personal property, or a"

(4) an employer and labor union or other organization

charge for transportation, insurance, or pre-

paring tangible personal property for market

or transportation, might be in any manner af-

fected; or

(6) regulate, fix, or limit the output of tangible per-

sonal property, or the amount of insurance under-

taken, or the amount of work performed in pre-

paring tangible personal property for market or

transportation; or

refrain from engaging in business, or from buying

or selling tangible personal property, partially or

entirely in this state.

(1)

to agree or combine so that

(A) a person is denied the right to work for an

employer because of membership or nonmem-

bership in the labor union or other organiza-

tion; or

(B) membership or nonmembership in the labor

union or other organization is made a condition

of obtaining or keeping a job with the employ-

er. (R.S. Art. 7428-1.)

(b) It is not a conspiracy in restraint of trade for

employees to agree to quit their employment, or

(R.S. Art. 7426; P.C. Art. 1632)

Acts 1967, 60th Leg., vol. 2, p. 2343, ch. 785, § 1.

§ 15.03. Conspiracy in Restraint of Trade Defined

(a) It is a conspiracy in restraint of trade for

to refuse to deal with tangible personal property

of their immediate employer, unless their refusal

to deal with tangible personal property of their

immediate employer is intended to induce, or has

the effect of inducing, that employer to refrain

from buying or otherwise acquiring tangible per-

(1) two or more persons engaged in buying or selling sonal property from a person; or (R.S. Art. 7428,

tangible personal property to agree not to buy subdiv. 3 (part), amd. by 50th Legis., Ch. 310, Sec.

from or sell to another person tangible personal 1; P.C. Art. 1634, subdiv. 3 (part), amd. by 50th

property; Legis., Ch. 309, Sec. 1.)

l4a

(2) persons to agree to refer for employment a migra-

tory farm worker who works on seasonal crops if

the referral is made irrespective of whether or not

the worker belongs to a labor union or other or-

ganization. (52nd Legis., Ch. 494, Sec. 2.)

Acts 1967, 60th Leg., vol. 2, p. 2343, ch. 785, § 1.

$15.04. Monopoly, Trust, and Conspiracy in Restraint

of Trade Prohibited; Agreement Violating

Prohibition Void

(a) Every monopoly, trust, and conspiracy in restraint

of trade, as defined in Sections 15.01, 15.02, and 15.03 of

this code, respectively, is illegal and prohibited. (R.S. Art.

7429.)

(b) An agreement violating the prohibition against a

monopoly, trust, or conspiracy in restraint of trade con-

tained in Subsection (a) of this section is void and unen-

forceable in law or equity. (R.S. Art. 7437.)

Acts 1967, 60th Leg., vol. 2, p. 2343, ch. 785, § 1.

§ 15.33. Criminal Penalties

(a) A person may not agree to form, form, be a party to

the formation of, or aid a monopoly, trust, or conspiracy

in restraint of trade, as defined in Sections 15.01, 15.02,

and 15.03(a) (1)-(3) of this code, respectively. (P.C. Art

1637.)

(b) A person acting as a member, agent, employee, of-

ficer, director, or stockholder of a business, firm, corpora-

tion, or association may not

(1) sell, purchase, contract, do business or any other

act for, or form or operate, the business, firm,

corporation, or association in violation of the pro-

hibition against a monopoly, trust, and conspiracy

in restraint of trade, as defined in Sections 15.01,

l5a

15.02, and 15.03(a) (1)-(3) of this code, respective-

ly; or

(2) in this state, with an intent to drive out competi-

tion or financially injure a competitor,

(A) sell a product below the cost of its manufacture

or production;

(B) give away a product; or

(C) give a secret rebate on the sale price of a prod-

uct. (P.C. Art. 1638.)

(c) A person who forms outside this state a monopoly,

trust, or conspiracy in restraint of trade, as defined in

Sections 15.01, 15.02, and 15.03(a) (1)-(3) of this code, re-

spectively, may not, with respect to the monopoly, trust,

or conspiracy in restraint of trade,

(1) cause or permit it to do business, operate, or have

an effect in this state;

(2) aid it to do business in this state or otherwise

violate the prohibition against a monopoly, trust,

or conspiracy in restraint of trade, as defined in

Sections 15.01, 15.02, and 15.03(a) (1)-(3) of this

code, respectively; or

(3) buy, sell, or contract for it.

(P.C. Art. 1639 (part).)

(d) A person who violates a provision of Subsection (a),

(b), or (c) of this section is guilty of a felony and upon

conviction is punishable by imprisonment in the peniten-

tiary for not less than 2 nor more than 10 years. (P.C. Art.

1639 (part).)

(e) A criminal prosecution under this section may be

brought in Travis or any other county in which a monop-

oly, trust, or conspiracy in restraint of trade is allegedly

16a

operating (P.C. Art. 1641.) Acts 1967, 60th Leg., vol. 2, p.

2343, ch. 785, § 1.

Texas Antitrust Statutes In Effect Prior To September

1, 1967

Art. 7426. [7796] “Trusts”

A “‘trust’’ is a combination of capital, skill or acts by

two or more persons, firms, corporations or associations of

persons, or either two or more of them for either, any or

all of the following purposes:

1. To create, or which may tend to create, or carry out

restrictions in trade or commerce or aids to commerce or

in the preparation of any product for market or transpor-

tation, or to create or carry out restrictions in the free

pursuit of any business authorized or permitted by laws

of this State.

2. To fix, maintain, increase or reduce the price of mer-

chandise, produce or commodities, or the cost of insurance,

or of the preparation of any product for market or trans-

portation.

3. To prevent or lessen competition in the manufacture,

making, transportation, sale or purchase of merchandise,

produce or commodities, or the business of insurance, or

to prevent or lessen competition in aids to commerce, or in

the preparation of any product for market or transporta-

tion.

4. To fix or maintain any standard or figure whereby

the price of any article or commodity of merchandise, pro-

duce or commerce, or the cost of transportation, or insur-

ance, or the preparation of any product for market or trans-

portation, shall be in any manner affected, controlled or

established.

5. To make, enter into, maintain, execute or carry out

any contract, obligation or agreement by which the parties

17a

thereto bind, or have bound themselves not to sell, dispose

of, transport or to prepare for market or transportation

any article or commodity, or to make any contract of in-

surance at a price below a common standard or figure or

by which they shall agree in any manner to keep the price

of such article or commodity or charge for transportation

or insurance, or the cost of the preparation of any product

for market or transportation at a fixed or graded figure,

or by which they shall in any manner affect or maintain

the price of any commodity or article or the cost of trans-

portation or insurance, or the cost of the preparation of

any product for market or transportation between them or

themselves and others, to preclude a free and unrestricted

competition among themselves or others in the sale or

transportation of any such article or commodity, or busi-

ness of transportation or insurance, or the preparation of

any product for market or transportation, or by which they

shall agree to pool, combine or unite any interest they may

have in connection with the sale or purchase of any article

or commodity, or charge for transportation or insurance or

charge for the preparation of any product for market or

transportation whereby its price or such charge might be

-in any manner affected.

6. To regulate, fix or limit the output of any article or

commodity which may be manufactured, mined, produced

or sold, or the amount of insurance which may be under-

taken, or the amount of work that may be done in the

preparation of any product for market or transportation.

7. To abstain from engaging in or continuing business,

or from the purchase or sale of merchandise, produce or

commodities partially or entirely within the State of Texas,

or any portion thereof. Acts 1903 p. 119.

Art. 7427. [7797] “Monopoly” defined

A monopoly is a combination or consolidation of two or

more corporations when effected in either of the following

18a

methods:

1. When the direction of the affairs of two or more cor-

porations is in any manner brought under the same man-

agement or control for the purpose of producing, or where

such common management on control tends to create a

trust as defined in the first article of this chapter.

2. Where any corporation acquires the shares or certif-

icates of stock or bonds, franchise or other rights, or the

physical properties or any part thereof, of any other cor-

poration or corporations, for the purpose of preventing or

lessening, or where the effect of such acquisition tends to

affect or lessen competition, whether such acquisition is

accomplished directly or through the instrumentality of

trustees or otherwise. Id.

Art. 7428. [7798] Conspiracies against trade

Either or any of the following acts shall constitute a

conspiracy in restraint of trade:

1. Where any two or more persons, firms, corporations

or associations of persons, who are engaged in buying or

selling any article of merchandise, produce or any com-

modity, enter into an agreement or undertaking to refuse

to buy from or sell to any other person, firm, corporation

or association of persons, any article of merchandise, pro-

duce or commodity.

2. Where any two or more persons, firms, corporations

or associations of persons, shall agree to boycott or threat-

en to refuse to buy from or sell to any person, firm, cor-

poration or association of persons for buying from or sell-

ing to any other person, firm, corporation or association of

persons.

3. Where any two or more persons, firms, corporations

or associations of persons shall agree to boycott, or enter

into any agreement or understanding to refuse to trans-

port, deliver, receive, accept, erect, assemble, operate, use

19a

or work with any goods, wares, merchandise, articles or

products of any other person, firm, corporation or associ-

ation of persons; provided, however, that this subdivision

of this Article shall not be construed to apply to an agree-

ment between employees to terminate their employment,

or to refuse to transport, deliver, receive, accept, erect,

‘assemble, operate, use or work with the goods, wares, mer-

chandise, articles or products of their immediate employer

unless such refusal is intended or calculated to induce, or

shall have the effect of inducing, such employer to refrain

from purchasing or from otherwise acquiring goods, wares,

merchandise, articles or products from any person, firm,

corporation or association of persons. Acts 1903 p. 119;

Acts 1947, 50th Leg. p. 530, ch. 310 § 1.

20a

APPENDIX F

Texas Alcoholic Beverage Code

$102.51. Setting of Territorial Limits

(a) Each holder of a manufacturer’s or nonresident man-

ufacturer’s license shall designate territorial limits in this

state within which the brands of beer the licensee manu-

factures may be sold by general, local, or branch distrib-

utor’s licensees.

(b) Each holder of a general, local, or branch distribu-

tor’s license shall enter into a written agreement with each

manufacturer from which the distributor purchases beer

for distribution and sale in this state setting forth the

nonexclusive territorial limits within which each brand of

beer purchased may be distributed and sold. A copy of the

agreement and any amendments to it shall be filed with

the administrator.

(Effective September 1, 1975)

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