# Petition — Adolph Coors Co. v. R. E. Spriggs Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1341%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition - **Published:** January 1, 1980 - **Citation:** 444 U.S. 1076 ## Text IN THE Supreme Court of the United S DEC 5 IABL ROGAK JR., CLERK “Gupreme Court, U.% », FILED 1979 October Term, 1979 No.-F-9~8 6 8 ADOLPH Coors COMPANY, a corporation, Petitioner, vs. R.E. Spriccs Co., INc., a California corporation, and PHOEBE SPRIGGS, Successor-in-interest to the Estate of Ralph E. Spriggs, Deceased, . Respondents. Petition for a Writ of Certiorari to the Court of Appeal of the State of California for the Second Appellate District. McCuTCHEN, BLACK, VERLEGER & SHEA, G. WILLIAM SHEA, FRANKLIN H. WILSON, Jupp L. JORDAN, 3435 Wilshire Boulevard, 30th Floor, Los Angeles, California 90010, (213) 381-3411, BRADLEY, CAMPBELL & CARNEY, LEO N. BRADLEY, 1717 Washington Avenue, Golden, Colorado 80401, (303) 278-3300, Attorneys for Petitioner Adolph Coors Company. Parker & Son, Inc., Law Printers, Los Angeles. Phone 724-6622 SUBJECT INDEX Page RE AS 2 a SESS CI 3 ESE ES Se 3 Constitutional Provisions and Statutes .................... 4 Neen ic esceseccdensncneloceness 5 Reasons for Granting the Writ .............................. 11 I. The Decision Below Conflicts With the Due Process Clause of the Fourteenth Amendment of the United States Constitution .................... 11 Copper Liquor Involved Different Conduct in a Different State at a Different Time at a Different Level of Distribution .................. 14 FTC Did Not Involve Clearly Identical Issues of Fact and There Is No Reference in FTC to Los Angeles County at Any Time Peri- od, Relevant or Otherwise, or to Spriggs .... 16 II. The Decision Below Conflicts With the Decision of pee. et ee ovens ................................ 17 III. The Decision Below !s Contrary to Decisions of the Federal Courts of Appeals ........................ 19 IV. The Decision Below Conflicts With Section 5(a) of the Clayton Act, 15 U.S.C. § 16(a) .......... 21 ES 23 ii. Appendix. Section 5(a), Federal Trade Commis- sion Act, ch. 311, § 5, 38 stat. 719 (1914), as amended by Act of Feb. 13, 1925, ch. 229, § 2, 43 stat. 939, Act of Mar. 21, 1938, ch. 49, § 3, 52 stat. 111, Act of June 25, 1948, ch. 646, § 32(a), 62 stat. 991, Act of May 24, 1949, ch. 139, § 127, 63 stat. 107. Act of July 14, 1952, ch. 745, § 2, 66 stat. 632, Act of Aug. 23, 1958, Pub. L. 85-726, Title XIV, § 1411, 72 stat. 809, Act of Sept. 2, 1958, Pub. L. 85-909, § 3, 72 stat. 1750 (current version at 15 U.S.C. § 45(a) ee essa Sunapee eaten ees App. p. 1 I I ee p cicceiags cnavastoead tans 4 EERE RSA RSTES Re tent ireaie Sees Ns) RO) ERE R OPE RS TO 4 REE AION SARI ENS SPREE IN OCR TC 26 Reporter’s Transcript, Testimony of Everett L. Barnhardt, Spriggs’ Adverse Witness ................-- 72 Reporter’s Transcript, Testimony of William Kistler Coors, Spriggs’ Adverse Witness ............ 75 Reporter’s Transcript, Coors’ Objections to Ad- mission of Spriggs’ Exhibit 80 ...........................- 76 a 77 Findings of Fact and Conclusions of Law .............. 83 sumgment Arter Trial Oy Cutt .........65eccsncccccances... 89 Coors’ Brief as Respondent in the California Court OO PII Sos ies chitvccenslp ante ic evetuunescencieeabekiacniataiens 91 Coors’ Post Hearing Letter Dated February 1, ik ee Mia cis Niinasiiartiaig tones Sashepeane pm aniageadendetices 94 Coors’ Post Hearing Letter Dated March 9, 1979.. 96 ‘iii. I i ee at ea Coors’ Petition for Rehearing in the California CE Oe TA iis ak a Modification of Opinion (94 Cal.App.3d 419, — Cal. Rptr. —) on Denial of Petition for et COON CTR RI DAUR TSP US EDO Eh OR ROR APES thn Coors’ Petition for Hearing in the Supreme Court A adeisc ukibceccals Sepscdcta almohiinbaitoe CAE TOT TROON onside ee eas SE TE WN UO oa gan svssccinapiccessioa ceeronsanicas | ae CEI PORN net Te RT ee PE ee OE The Court of Appeal Uses the FTC and Copper Liquor Decisions, Which Did Not Involve Identical Issues, to Collaterally Estop Coors From a Trial on Liability, Thus Denying Coors Due Process of Law Under the Four- teenth Amendment of the United States Con- stitution and Article I, Section 7 of the Cali- EE, ne A. Copper Liquor Involved Different Con- duct in a Different State at a Different Time at a Different Level of Distribu- a ed ee) B. FTC Did Not Involve Clearly Identical Issues of Fact and There Is No Refer- ence in FTC to Los Angeles County at Any Time Period, Relevant or Otherwise, OP Se TI vase gehen astitncesitossenss 13] 134 iv. Page C. Spriggs If Is Contrary to Del Rio, A & S, La Fortune and Sylvania ........................ 137 II. A Judgment Affirming an FTC Order Under Section 5 of the FTC Act Is Not Admissible as Conclusive Evidence in a Private Treble pmnmenges ANGE ancien Sicieuonens ae 141 Conclusion V. TABLE OF AUTHORITIES CITED Cases Page Adolph Coors Co. v. A & S Wholesalers, Inc., 561 P.26 Ger (10th Cir. 1977) (“A & S&S”) .....-........ SA aNeghdsstallenshenieiedkndaesideaseceibcccanesiivenn 2, 9, 13, 20, 21 Adolph Coors Co. v. FTC, 497 F.2d 1178 (10th Cir. 1974), cert. denied, 419 U.S. 1105 (1975) OR dee ek LS Zz, 3, &, 7, 4. 4, ORO PLES NS CSR te ott ee 13, 16, 17, 19, 20, Antibiotic Antitrust Action, In re, 333 F. Supp. 317 (S.D.N.Y. 1971) ..........-.. a a ea Bernhard v. Bank of America, 19 Cal. 2d 807, 122 s&h, das ene nt ener Oran Boddie v. Connecticut, 401 U.S. 371 (197 1) ree, California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., cert. granted, 48 U.S.L.W. 3217 (U.S. Oct. 2, 1979) (No. 79-97) ........ Prete a ae Commissioner v. Sunnen, 333 U.S. 591 (1948) Continental T.V., Inc. v. GTE Sylvania Inc., 433 CB. 36 CEST) CORVIVOIR } ov resisvcncciscessicssccien Po STEN, SPUN RA RTO RIOTED ATONE 4, 8, 9, 17, 18, 20, Copper Liquor, Inc. v. Adolph Coors Co., 506 F. 2d 934 (Sth Cir. 1975) (“Copper Liquor”) .... BSI ran ern arg ea 2, 6, 7, 9, 10, 13, 14, 15, 16, Cox Broadcasting Corp. v. Cohn, 420 U.S. 469 a teal dn inAidcte sek bdslaidam aaa laoesinnts Del Rio Distributing, Inc. v. Adolph Coors Co., 589 F.2d 176 (Sth Cir.), cert. denied, 48 U.S.L.W. 3219 (U.S. Oct. 2, 1979) (No. 78- BPO) C BIOE TIP onnscccrexsnssterte a % 44, 33, 19, 10 21 21 11 11 10 14 21 19 20 Vi. Page Expert Electric, Inc. v. Levine, 554 F.2d 1227 (2d Cir.), cert. denied, 434 U.S. 903 (1977) ............ 11 Farmington Dowel Products Co. v. Forster Mfg. Co, O21 Fie Oe Etat Ce. FR) nnn ccinceccssc.. 17 FTC v. Cement Insti*ute, 333 U.S. 683 (1948) .... 22 Hardy Salt Co. v. State of Illinois, 377 F.2d 768 (8th Cir.), cert. denied, 389 U.S. 912 (1967) .... 15 Haung Tang v. Aetna Life Ins. Co., 523 F.2d 811 I IPE ois iit Gehencnscucsncecadsssasernauanesniers 1] Hudson Distributors v. Eli Lilly, 377 U.S. 386 L RIRSRTSARID BLAIR pd oo tn Re RE OPS 3 Marin County Bd. of Realtors, Inc. v. Palsson, 16 Cal. 3d 920, 120 Cal. Rptr. 1, 549 P.2d 833 RI a aiken Caan ih Aciadieriounesdatedaiehvind 1 New Jersey Wood Finishing Co. v. Minnesota Mining & Mfg. Co.:, 332 F.2d 346 (3d Cir. 1964), aff'd on other grounds, 381 U.S. 311 0) ARRESTS ITs ART esha deioto Mey a 21 North Carolina v. Chas. Pfizer & Co., 537 F.2d 67 (4th Cir.), cert. denied, 429 U.S. 870 SN sn tes ee zi. 22 Proper v. John Bene & Sons, Inc., 295 F. 729 RI, I ae oe Cd ey ho rs a Purex Corp. v. Procter & Gamble Co., 453 F.2d 288 (9th Cir. 1971), cert. denied, 405 U.S. 1065 PIII > eee nacdn ud ingame tensmaicwdacsbcmuaa A, 22 R.E. Spriggs Co. v. Adolph Coors Co., 37 Cal. App. 3d 653, 112 Cal. Rptr. 585 (1974) ....0000002... 7, 14 Sam Fox Publishing Co. v. United States, 366 U.S. a a ncaenld lo innntiascoe 22 Vii. Page State of Michigan v. Morton Salt Co., 259 F. Supp. Jo CE FE. TOe ince ocr cane 15 Theatre Enterprises, Inc. v. Paramount Film Distrib. Corp., 346. U.S. SOT CIBGS) -fncncecciane nt, 32 United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967) (“Schwinn”) ....2............. 4, 5, 7, 8, 20 White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963) ............22.... 6 Statutes California Business and Professions Code, Secs. REP ROT onsksernccencecnckcs lee uen 1 California Civil Code, Sec. 1790 ....02.0...2.2eee eee. 17 Clayton Act, Sec. 5(a) (15 U.S.C. § 16(a) € RIF RD ~ sccestadecdvenmaibeadsecd cane’ 4. 5. Fe Beco Federal Trade Commission Act, Sec. 5 (15 U.S.C. © RE scccoscsscvceaapaeee eee 4, 3, 6& di, 22 United States Code, Title 28, Sec. 1257(3) .......... 3 United States Constitution, Art. VI, Cl. 2 ................ 4 United States Constitution, Fourteenth Amendment DF iccsinsinvinicttloet eka gealesdeucieaauiaaenadededaaaeaaae 4 Textbook 16 von Kalinowski, J., Antitrust Laws and Trade Regulation, Sec. 111.02[3], pp. 111-25-26, 27-28 C2 FUED a vicénissnanssccchucennsouspirnaamivoeaaaaaanae 13, 15 IN THE Supreme Court of the United States October Term, 1979 Nt ete ADOLPH Coors COMPANY, a corporation, Petitioner, vs. R.E. Spriccs Co., INc., a California corporation, and PHOEBE SPRIGGS, Successor-in-interest to the Estate of Ralph E. Spriggs, Deceased, Respondents. Petition for a Writ of Certiorari to the Court of Appeal of the State of California for the Second Appellate District. Petitioner Adolph Coors Company (“Coors”) re- spectfully prays that a writ of certiorari issue to review the judgment and opinion of the Court of Appeal of the State of California for the Second Appellate District dated June 26, 1979, as modified on denial of petition for rehearing on July 23, 1979. Appendix (“App.”) 98-112, 125. The decision of the California court denies Coors a trial on liability in a private antitrust action for treble damages under the Cartwright Act (Cal. Bus. & Prof. Code §§ 16700-16758).* It reversed the trial *California’s Cartwright Act is similar, although not identical, to the Sherman Act. Federal decisions interpreting the Sherman Act are “applicable” under the Cartwright Act. E.g., Marin County Bd. of Realtors, Inc. v. Palsson, 16 Cal. 3d 920, 925, 120 Cal. Rptr. 1, 549 P.2d 833 (1976). a. ae court judgment in favor of Coors and held Coors liable as a matter of law with a new trial only on the amount of damages. The California Court of Appeal gave collateral estoppel effect to two federal Court of Appeals decisions, Copper Liquor, Inc. v. Adolph Coors Co., 506 F.2d 934 (Sth Cir. 1975) (“Copper Liquor’), and Adolph Coors Co. v. FTC, 497 F.2d 1178 (10th Cir. 1974), cert. denied, 419 U.S. 1105 (1975) (“FTC”), despite the fact that the two Courts ot Appeals that rendered these decisions have expressly refused to give them collateral effect in subsequent lawsuits involving Coors, Del Rio Distributing, Inc. v. Adolph Coors Co., 589 F.2d 176 (Sth Cir.), cert. denied, 48 U.S.L.W. 3219 (U.S. Oct. 2, 1979) (No. 78-1876) (“Del Rio”), and Adolph Coors Co. v. A & S Wholesalers, Inc., 561 F.2d 807 (10th Cir. 1977) (“A & S”). (Copper Liquor and FTC appear in the appendix at pages 27 and 5, respectively.) Opinions Below. The opinion of the California Court of Appeal is reported at 94 Cal. App. 3d 419, modified on denial of rehearing, 95 Cal. App. 3d 1028a, as modified, _ 156 Cal. Rptr. 738 (1979), and appears in the appen- dix. App. 98-112, 125. The judgment and findings of fact and conclusions of law on the second trial dated April 15, 1977 and the notice of intended decision dated December 17, 1976 of the Superior Court of the State of California for the County of Los Angeles are not reported and appear in the appendix. App. 77-89. nities Jurisdiction. The judgment of the California Court of Appeal was filed on June 26, 1979. App. 98. A petition for rehearing was denied on July 23, 1979. App. 125. A petition for hearing in the Supreme Court of the State of California was denied on September 6, 1979. App. 143. This petition for certiorari is filed under, section 1257(3) of Title 28 of the United States Code within 90 days from the denial of hearing in the Supreme Court of the State of California. This Court has jurisdiction to review the judgment of the California Court of Appeal because that court has imposed liability on Coors without a hearing on that issue and sent the case back to the trial court only to determine the amount of damages. It rejected Coors’ argument that this result would be a denial of due process under the Fourteenth Amendment. This rejection was left undisturbed by the California Supreme Court. On this federal issue the decision below is final under state law and may be treated as final for purposes of review by this Court. See Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 476-87 (1975); Hudson Dis- tributors v. Eli Lilly, 377 U.S. 386, 389 n.4 (1964). Questions Presented. 1. Whether offensive collateral estoppel using fed- eral antitrust judgments from different time periods and different geographic markets to deny a defendant a trial on liability in a state antitrust action violates the Due Process Clause of the Fourteenth Amendment of the United States Constitution. 2. Whether collateral estoppel using federal anti- trust judgments that relied on the now defunct Schwinn a ve doctrine violates the decisional law of the United States including the decision of this Court in Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977), (“Sylvania”), overruling United States v. Arnold, Schwinn & Co., 388 U.S. 365 (1967) (“Schwinn”). 3. Whether denying a defendant a trial on liability in a private antitrust action using a government judg- ment under section 5 of the Federal Trade Commission Act (15 U.S.C. § 45) violates section 5(a) of the Clayton Act (15 U.S.C. § 16(a)). Constitutional Provisions and Statutes. Supremacy Clause (Art. VI, cl. 2), United States Constitution: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; .. Shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” Due Process Clause (Section 1), Fourteenth Amend- ment, United States Constitution: “#* %* nor shall any State deprive any person of life, liberty, or property, without due process of law; * * *” Section 5(a), Clayton Act, 15 U.S.C. § 16(a) (1976): “A final judgment or decree heretofore or here- after rendered in any civil or criminal proceeding brought by or on behalf of the United States under the antitrust laws to the effect that a defend- ant has violated said laws shall be prima facie evidence against such defendant in any action a oe or proceeding brought by any other party against such defendant under said laws or by the United States under section 15a of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the parties there- to: Provided, That this section shall not apply to consent judgments or decrees entered before any testimony has been taken or to judgments or decrees entered in actions under section 15a of this title.” Section 5, Federal Trade Commission Act: Section 5 of the Federal Trade Commission Act is lengthy and is therefore set forth in the appendix. App. 1. Statement of the Case. The fourteen year history of this case reflects the birth of the Schwinn doctrine, its death in Sylvania, and its attempted resurrection by the California Court of Appeal: 1. In Schwinn, this Court held that territorial limi- tations were per se violations of section | of the Sher- man Act. 388 U.S. at 382. 2. In FTC, the Tenth Circuit affirmed an order of the Federal Trade Commission under section 5 of the Federal Trade Commission Act’ (15 U.S.C. § 45) prospectively enjoining Coors from enforcing its territorial limitations after July 24, 1973. The court stated that it was “compelled to follow the Schwinn per se rule rendering Coors’ territorial limitations illegal per se... .” 497 F.2d at 1187, App. 20. The Tenth Circuit expressly requested this Court to reconsider the Schwinn per se rule for unique products such as Coors beer: a “Although we are compelled to follow the Schwinn per se rule rendering Coors’ territorial restrictions oa resale illegal per se, we believe that the per se rule should yield to situations . here a unique product requires territorial restric- tions to remain in business. For example, speed of delivery, quality control of the product, refrig- erated delivery, and condition of the Coors product at the time of delivery may justify restraints on trade that would be unreasonable when applied to marketing standardized products. La Fortune v. Ebie, supra. Perhaps the Supreme Court may see the wisdom of grafting an exception to the per se rule when a product is unique and where the manufacturer can justify its territorial restraints under the rule of reason. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963). 497 F.2d at 1187, App. 20. In this case Coors’ petition for rehearing in the Court of Appeal and petition for hearing in the Supreme Court of California pointed out that a judgment under section 5 of the FTC Act is neither admissible nor conclusive in a private treble damages action. App. 113, 120-124, 127, 141-142. 3. In Copper Liquor, the Coors distributor in Brownwood, Texas “felt constrained” not to deliver Coors beer to a retailer who bought a store in Brown- wood in January of 1966 and “advertised Coors at less than his own cost, using it as a ‘loss leader.’ ” 506 F.2d at 936, 939, 950, App. 27-28, 35, 51. The Fifth Circuit affirmed in part a jury verdict against Coors under the Sherman Act, holding that Coors’ terri- torial limitations were “ancillary to an illegal price fix- ~~ ing scheme” and illegal per se under Schwinn, 506 F.2d at 947-48, App. 52-53. 4. At the 1976 trial in this case, the trial court bifurcated liability from damages and determined that during the relevant time period—the four years before October 18, 1965—Coors’ territorial restrictions in Los Angeles County, California were reasonable and did not violate the Cartwright Act.* App. 85-88. In fact, the trial court specifically found that Coors’ territorial restrictions were the only effective way to enforce qual- ity control and availability to small retailers and to ensure compliance with extensive state regulation in California. App. 85-86, 88. The trial court also held that Coors was not collaterally estopped by FTC, Cop- per Liquor and the district court decision in A & S, which was thereafter reversed on appeal. App. 87. In its notice of intended decision, the trial court ex- plained that those cases did not involve identical issues: “The Court finds that Coors is not bound by the doctrine of collateral estoppel by reason of the decisions in FTC, Copper Liquor and A & § *This case was originally filed in the California Superior Court for the County of Los Angeles by Coors in 1965 seeking to terminate Spriggs as a distributor and to enjoin certain conduct of Spriggs. Spriggs cross-complained and a trial was held in the Los Angeles Superior Court in 1971. The court found in Coors’ favor on all issues and. on the court’s own motion, dismissed Spriggs’ cross-claims under the Cartwright Act on the ground that the alleged restraints of commerce involved interstate commerce and therefore were within the exclusive jurisdiction of the federal court. The California Court of Appeal in R.E. Spriggs Co. v. Adoiph Coors Co., 37 Cal. App. 3d 653, 112 Cal. Rptr. 585 (1974), held that the Superior Court had jurisdiction over the Cartwright Act claim and re- manded the case for further proceedings which resulted in the second trial in the Superior Court in 1976 and the subsequent appellate proceedings from which this petition is taken. ec Wan “The doctrine of collateral estoppel cannot be used to require a court to apply inappropriate law or appellate decision. The real thrust of Spriggs’ argument on collateral estoppel is to re- quire application of the per se approach. As in- dicated above, such conclusion cannot be reached by this Court. “Secondly, the three cases relied upon by Spriggs did not involve a determination of completely identical issues. “Thirdly, to the extent that the question is open it does not appear to be appropriate to apply the doctrine offensively in favor of a stran- ger to the prior litigation, which is the result Spriggs urges.” App. 79 (emphasis added). The non-identity of issues and injustice of applying collateral estoppel were raised in the California Court of Appeal in Coors’ brief as respondent, in Coors’ post hearing letter to the Court of Appeal of February 1, 1979 and in Coors’ petition for rehearing and were reiterated in Coors’ petition for hearing in the California Supreme Court. App. 92-95, 114-119, 126-127, 131- 137, 142. The petitions for hearing and rehearing speci- fically cited and discussed the Due Process Clause of the Fourteenth Amendment of the United States Con- stitution and evidence that during the relevant time period in Los Angeles County, California territories were not imposed to carry out pricing policy. App. 113-114, 123-124, 127, 131, 142. 5. In Sylvania, this Court expressly overruled Schwinn, noting that the Tenth Circuit in FTC had expressly urged the Court pom “to consider the need in this area for greater flexibility, Adolph Coors Co. v. FTC, 497 F.2d 1178, 1187 (CAI0O 1974).” 433 USS. at 49 n.14, Sylvania was cited and discussed extensively in Coors’ brief as respondent in the California Court of Appeal and in its petition for hearing in the California Su- preme Court. App. 91-92, 128-!Z9, 139-141. 6. In A & S, the Tenth Circuit held that Coors’ territorial limitations were not illegal per se, expressly refusing to follow its own decision in FTC because Schwinn had been overruled by Sylvania. 561 F.2d at 811-12. 7. In Del Rio Distributing, Inc. v. Adolph Coors Co., the Fifth Circuit held that Coors’ territorial limita- tions were not illegal per se and that the doctrine of collateral estoppel could not be applied to its own decision in Copper Liquor or to the decision of the Tenth Circuit in FTC, because Schwinn had been over- ruled by Sylvania. 589 F.2d at 179 & n.4. Del Rio was cited by Coors and its significance discussed in a letter to the California Court of Appeal dated March 9, 1979, enclosing a copy of the opinion. App. 96-97. Del Rio was again raised in Coors’ petition for rehearing in the Court of Appeal and in Coors’ petition for hearing in the California Supreme Court. App. 113, 119-120, 130, 137-138. 8. On Spriggs’ appeal from the trial court judgment in favor of Coors after the 1976 trial on_ liability in this case, the California Court of Appeal* held *Proper consideration of this petition unfortunately requires that the opinion of the California Court of Appeal not be taken at face value. For one example, the Coors policy manual (This footnote is continued on next page) _— oe that Coors was collaterally estopped and reversed, not for a new trial which would give Coors an opportunity to be heard on the liability issue, but with an explicit direction to the trial court to enter judgment against Coors because of the decisions in Copper Liquor and FTC. quoted extensively by the Court of Appeal was not “admitted to be relevant at all times” as the court states (App. 100) but was dated June 1970 (more than four years after the relevant time period) and was admitted into evidence over Coors’ strong and repeated objections and evidence that it was not relevant. E.g., App. 472-76. The Court of Appeal also noted the unconstitutionality of the price provisions of California’s Alcoholic Beverage Control Act (App. 104), an issue that is currently before this Court in California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., cert. granted, 48 U.S.L.W. 3217 (U.S. Oct. 2, 1979) (No. 79-97). a on REASONS FOR GRANTING THE WRIT. I. The Decision Below Conflicts With the Due Process Clause of the Fourteenth Amendment of the United States Constitution. This Court has stated that due process of law requires a meaningful opportunity to be heard: “|D|ue process requires, at a minimum, that ab- sent a countervailing state interest of overriding significance, persons forced to settle their claims of right and duty through the judicial process must be given a meaningful opportunity to be heard.” Boddie v. Connecticut, 401 U.S. 371, 377 (1971). Coors submits that, if collateral estoppel is to be applied so aS to meet the due process standard, there must be an identity of issues as well as parties for the opportunity to be heard to be meaningful. See, e.g., Expert Electric, Inc. v. Levine, 554 F.2d 1227, 1233 (2d Cir.), cert. denied, 434 U.S. 903 (1977); Haung Tang v. Aetna Life Ins. Co., 523 F.2d 811, 813 (9th Cir. 1975); Bernhard v. Bank of America, 19 Cal. 2d 807, 811, 122 P.2d 892 (1942). By its reversal of the second judgment that Coors was not liable to Spriggs, the California court has foreclosed Coors from any hearing on the liability issue. This denial of due process to Coors rests upon erroneous application of coliateral estoppel based on two federal judgments which did not involve identical issues. This Court expressly held application of col- lateral estoppel based on different time periods and geographic markets to be improper in Theatre Enter- om prises, Inc. v. Paramount Film Distrib. Corp., 346 U.S. 537 (1954): “The trial judge instructed, in effect, that the Paramount decrees alone could not support a re- covery by petitioner; additional evidence was re- quired to relate the presumed Paramount conspir- acy to Baltimore and to the claimed damage period. The reasons for this are clear. The Para- mount decrees did not rest on findings, nor were the findings based on evidence, of a particular conspiracy concerning restrictions on runs and clearances in Baltimore theatres; yet such a con- spiracy is the nub of plaintiff's claim. The Para- mount case involved a conspiracy found to exist as of 1945, which was enjoined no later than June 25, 1948; but the conspiracy alleged here involves a claimed damage period running from February 1949 to March 1950. Indeed, the rele- vancy of Paramount to the instant case is slight. We need not pass on respondents’ contention that petitioner was entitled to no benefit at all from the earlier decrees. We merely hold that petitioner was entitled to no greater benefit than the trial judge gave it.” 346 U.S. at 543-44 (footnote omitted). Most recently this Court refused to review a Fifth Circuit decision rejecting the use of collateral estoppel based on the same two judgments against Coors to impose liability upon Coors. Del Rio Distributing, Inc. v. Adolph Coors Co., 589 F.2d 176 (Sth Cir.), cert. denied, 48 U.S.L.W. 3219 (U.S. Oct. 2, 1979). This also is in direct conflict with the decision of the Cali- fornia Court of Appeal. a. oe An antitrust judgment not expressly dealing with the same time and place has no estoppel effect in a subsequent private treble damages action: “The findings in a government antitrust judg- ment or decree have an estoppel effect in a sub- sequent treble damage action only as to the time and place of the unlawful activity expressly dealt with in the prior decree. Essentially, this means that a finding that the defendant has violated the law in some particular geographical area during a specific period will not serve as proof that he acted unlawfully in the same manner in a different area or at another time.” 16 J. von Kalinowski, Antitrust Laws and Trade Regulation § 111.02[3] at 111-25- 26 (1978). In the instant case application of collateral estoppel constitutes a denial of due process because both federal decisions relied upon (FTC and Copper Liquor) in- volved different conduct in a different geographical area at a different time, and did not involve clearly identical issues. In Del Rio and A & § the federal courts deciding Copper Liquor and FTC expressly re- fused to give collateral estoppel effect to their earlier judgments. Despite the fact that the very courts that decided FTC and Copper Liquor have subsequently refused to find Coors collaterally estopped by those decisions because of the intervening Sylvania decision, the California Court of Appeal has now given collateral estoppel effect to those decisions. — In Commissioner v. Sunnen, 333 U.S. 591 (1948), this Court rejected collateral estoppel based on such obsolete decisions: osigliilieds “[A] subsequent modification of the significant facts or a change or development in the control- ling legal principles may make that [earlier] deter- mination obsolete or erroneous, at least for future purposes. . . . That principle [of collateral estop- pel] is designed to prevent repetitious lawsuits over matters which have once been decided and which have remained substantially static, factually and legally. It is not meant to create vested rights in decisions that have become obsolete or erro- neous with time, thereby causing inequities... .” 333 US. at 599. Copper Liquor Involved Different Conduct in a Differ- ent State at a Different Time at a Different Level of Distribution. The first trial in this case in 1971 determined that Spriggs was properly terminated as a Coors distributor on September 22, 1965. See R.E. Spriggs Co. v. Adolph Coors Co., 37 Cal. App. 3d 653, 656, 112 Cal. Rptr. 585 (1974). After the second trial in 1976, the trial court specifically found that “lt}he ‘relevant period’ as sometimes referred to in these findings of fact is the four years preceding the filing of the cross-complaint on October 18, 1965.” Finding of Fact 16, App. 86. In Copper Liquor the plaintiff was a retailer named Letcher in Brownwood, Texas, who did not acquire his store until 1966: “Letcher acquired a sole proprietorship in the Brownwood store in January of 1966. About the same time, Coors entered the Brownwood market.” 506 F.2d at 939, App. 35. ae Thus, Copper Liquor clearly involved a different time period. Moreover, the relevant geographic market in Copper Liquor had been designated as “the market for beer in Brownwood, Texas.” 506 F.2d at 950, App. 59. There was no question that the relevant geographic market in this case was the market for beer in Los Angeles County, California. See, e.g., Findings of Fact 3, 4, 7, 13, 14, 15, Conclusions of Law 8, 10, 11, App. 83-84, 86, 88. The Copper Liquor judgment con- cerning events in Brownwood, Texas after January 1, 1966 is not relevant evidence of events in Los Angeles County, California prior to October 18, 1965. “A judgment addressing itself to acts or prac- tices committed in a defined geographical area is not admissible in an action in which the plaintiff is alleging unlawful activities elsewhere.” 16 J. von Kalinowski, Antitrust Laws and Trade Regulation § 111.02[3] at 111-27-28 (1978). See, e.g., State of Michigan v. Morton Salt Co., 259 F. Supp. 35, 73-75 (D. Minn. 1966), aff'd sub nom. Hardy Salt Co. v. State of Illinois, 377 F.2d 768 (8th Cir.), cert. de- nied, 389 U.S. 912 (1967). Finally, the plaintiff in Copper Liquor was a retailer who claimed that Coors refused to deliver beer to him because he was selling Coors below his own cost: “Letcher advertised Coors at less than his own cost, using it as a ‘loss leader’.” 506 F.2d at 939, App. 35. In this case not only are the plaintiffs different indi- viduals; their status is also different. Spriggs was not a retailer as was the plaintiff in Copper Liquor. Soriggs was a distributor. —) FTC Did Not Involve Clearly Identical Issues of Fact and There Is No Reference in FTC to Los Angeles County at Any Time Period, Relevant or Other- wise, or to Spriggs. In FTC, the Court of Appeals and Federal Trade Commission both relied very heavily upon the testimony of Mr. Letcher, the plaintiff in Copper Liquor. See 497 F.2d at 1185, App. 15. As discussed above, Coors’ dealings with Letcher clearly involved different conduct in a different state at a different time and at a different level of distribution from Spriggs. Moreover, the FTC opinion affirmed an equitable decree operating prospectively from July 24, 1973. 497 F.2d at 1181-82 n.2, App. 6-8. Especially in view of FTC’s reliance on the testimony of the plaintiff in Copper Liquor, supra, it is clear that FTC did not involve identical conduct at an identical time and place to the conduct, time and place involved in this case. Because FTC did not involve identical issues of fact, application of collateral estoppel is clearly error. Indeed, the only references in FTC to activities of Coors in California were to the Oakland and Sacra- mento areas in Northern California; there is no refer- ence to any conduct of Coors in Los Angeles County in Southern California at any time period, relevant or otherwise, and no reference to Spriggs. Coors in Copper Liquor and FTC never had any motive or opportunity to litigate any liability to Spriggs for any conduct by Coors in Los Angeles County involving Spriggs. Thus, the Court of Appeal’s decision denied due process to Coors by using cases involving different facts to impose liability without trial. The judgment in FTC determined only that there was substantial evidence to support the findings of a the administrative agency, and did not determine that Coors had violated the antitrust laws in Los Angeles County prior to October of 1965, an essential element of Spriggs’ claim. 497 F.2d at 1184-86, App. 13-17. There appears to be a square conflict among the circuits as to whether an FTC order is a judgment under section 5(a) of the Clayton Act. Compare, e.g., Purex Corp. v. Procter & Gamble Co., 453 F.2d 288, 291 (9th Cir. 1971), cert. denied, 405 U.S. 1065 (1972) and Proper v. Join Bene & Sons, Inc., 295 F. 729 (E.D.N.Y. 1923) with Farmington Dowel Products Co. v. Forster Mfg. Co., 421 F.2d 61 (1st Cir. 1969). Il. The Decision Below Conflicts With the Decision of This Court in Syivania. In Sylvania, this Court expressly overruled Schwinn. The Court noted that the Tenth Circuit in FTC had “expressly urged [the Court] to consider the need in this area for greater flexibility. Adolph Coors Co. v. FTC, 497 F.2d 1178, 1187 (CA 10 1974).” 433 USS. at 49 n.14. Then, this Court in Sylvania expressly recognized that vertical restrictions promote interbrand competition by allowing the manufacturer to achieve distribution ef- ficiencies and noted that federal and state regulations increasingly require such control. 433 U.S. at 54-55 & n.23, citing, e.g., Cal. Civ. Code § 1790 et seq. However, the opinion of the Court of Appeal in this case ridiculed the specific findings of the trial court that Coors’ territorial restrictions were necessary and reasonable for reasons recognized by this Court in Sylvania: =) “Eventually the trial court signed findings and conclusions. We summarize the highlights: 1. Com- pliance with various state laws could ‘be accom- plished in an effective way only by absolute desig- nation of responsibility under territorial guidelines.’ 2. Territorial limitations on distributorships were the only practicable way for insuring quality con- trol. 3. Further, such territorial limitations and certain regulations which Coors enforced prevented distributors from servicing only the large, profita- ble accounts. Thus the system vindicated the pub- lic’s ‘right to the widest availability of Coors beer.’ 4. The territorial limitations had no restraining effect on interbrand competition. 5. There was no evidence that the people of Los Angeles would have benefited from intrabrand competition and there was evidence to the contrary. 6. There was no collusion among Coors’ distributors. 7. The territorial limitations were a vertical restraint but did not, per se, violate the Cartwright Act. 8. The territorial limitations were reasonable under the Cartwright Act in the light of Coors’ legiti- mate need to insure quality control and compliance with all applicable state laws and regulations.” 94 Cal. App. 3d at 425, App. 102. Thus, the California court summarily rejected the antitrust policy of the United States articulated by this Court in Sylvania. — III. The Decision Below Is Contrary to Decisions of the Federal Courts of Appeals. The United States Court of Appeals for the Fifth Circuit, the court that decided Copper Liquor, recently refused to give collateral estoppel effect to that decision in Del Rio. The plaintiff in Del Rio had been a Coors distributor until termination by Coors, Del Rio sued alleging violations of the antitrust laws by Coors by means of “fixing of wholesale and retail prices and the limiting of territories where Coors beer could be resold.” 589 F.2d at 177.: Following an adverse jury verdict and denial of mo- tions for new trial or judgment n.o.v., Del Rio appealed and urged that Copper Liquor and FTC should be given collateral estoppel effect. “Del Rio contends that adverse judgments en- tered against Coors in Adolph Coors Co. v. Federal Trade Commission, 497 F.2d 1178 (10th Cir. 1974), and Copper Liquor, Inc. v. Adolph Coors Co., 506 F.2d 934 (Sth 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 Liquor 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 “4We also find that the trial judge did not err in refusing to take judicial notice of Adolph Coors Co. v. Federal Trade Commission, 497 F.2d 1178 (10th Cir. 1974) or in refusing to enter into evidence the F.T.C. Com- plaint and the F.T.C. Cease and Desist Order.” a. oe desist order brought under § 5 of the Federal Trade Commission Act. The Federal Trade Com- mission had overturned the decision of an admin- istrative law judge who had found no violation of the act. In reaching its decision on vertically imposed territorial 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 appli- cation in the instant case.” 589 F.2d at 178 & n.4. Although Del Rio had been decided by the Fifth Circuit and cited by Coors, the original opinion of the California Court of Appeal in this case did not even mention Del Rio. On denial of rehearing that court at last took note of this decision but rejected Del Rio’s teaching by adding a footnote stating that it was “not persuaded by that court’s [the Fifth Cir- cuit’s] narrow legal view of collateral estoppel.” App. 125. As noted earlier, this Court refused to review the Fifth Circuit’s rejection of the same collateral estoppel applied in this case. Del Rio Distributors, Inc. v. Adolph Coors Co., 48 U.S.L.W. 3219 (U.S. Oct. 2, 1979) (78-1876). | Finally, in A & S. the Tenth Circuit expressly refused to follow its own decision in FTC, stating that its FTC decision was “firmly anchored” to Schwinn, which was overruled in Sylvania: “We see no merit in this contention [for a directed verdict under FTC| inasmuch as it relies almost exclusively on the same predicate discussed in lil sin (1) above: ‘A & S was entitled . . . to have the jury informed that the vigorously enforced territorial restrictions of Coors was a per se viola- tion of the Sherman Act and that all that they had to determine was the fact and amount of damages.’ [Brief of A & S, Appellant, Cross- Appellee, p. 23.| The Supreme Court decision in Continental T.V., Inc. v. GTE Sylvania, In- corporated, supra, disposes of this issue adversely to A & S.” 561 F.2d at 811-12. IV. The Decision Below Conflicts With Section 5(a) of the Clayton Act, 15 U.S.C. § 16(a). The California Court of Appeal decision in this case holds that the FTC order in the FTC case is conclusive against Coors. This is not the law. Such an order is made under section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45, which is much broader than the Clayton and Sherman Acts. It is not a judg- ment “under the antitrust laws” under section 5(a) of the Clayton Act, 15 U.S.C. § 16(a), and therefore is not admissible in a private treble damages action. See North Carolina v. Chas. Pfizer & Co., 537 F. 2d 67 (4th Cir.), cert. denied, 429 U.S. 870 (1976); New Jersey Wood Finishing Co. v. Minnesota Mining & Mfg. Co., 332 F.2d 346 (3d Cir. 1964), aff'd on other grounds, 381 U.S. 311 (1965); In re Anti- biotic Antritrust Action, 333 F. Supp. 317 (S.D.NLY. 1971); Proper v. John Bene & Sons, Inc., 295 F. 729 (E.D.N.Y. 1923). In North Carolina v. Chas. Pfizer & Co., supra, for example, the Fourth Circuit held that collateral estoppel did not apply to a judgment under section =, 5 of the FTC Act, which was “an administrative pro- ceeding, not a judicial trial.” 537 F.2d at 74. The court declared the difference between the FTC Act and the antitrust laws: “The issue before the Commission was whether the respondents in that proceeding were guilty of unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act which is a regulatory statute much broader in its scope than the Clayton and Sherman Acts under which the present litigation was instituted. * * * “(Bly the very terms of the Federal Trade Com- mission Act, proceedings under section 5 appear to be incompatible with the doctrine of collateral estoppel.” 537 F.2d at 74. Moreover, section 5(a) of the Clayton Act, 15 U.S.C. § 16{a), provides that judgments in actions brought by the United States under the Sherman Act (but not the FTC Act) create at most a rebuttable presumption. E.g., Purex Corp. v. Procter & Gamble Co., 453 F.2d 288, 291 (9th Cir. 1971), cert. denied, 405 U.S. 1065 (1972) (“takes no question of fact from either court or jury . .. [n]or does it in any- wise work a denial of due process of law”). See Sam Fox Publishing Co. v. United States, 366 U.S. 683, 690 (1961) (Clayton Act § 5 is a “definitive legislative pronouncement that a government suit cannot be preclusive of private litigation”); FTC v. Cement Institute, 333 U.S. 683, 706 (1948) (“the effect of the Commission’s order is not to punish or to fasten liability on respondents for past conduct but to ban specific practices for the future in accordance with the general mandate of Congress”). a Conclusion. Since the petition presents a constitutional conflict on the proper scope of collateral estoppel between federal and state court application involving federal court decisions, a writ of certiorari should issue to review the judgment and opinion of the Court of Appeal of the State of California for the Second Appellate District in this case. Respectfully submitted, McCuTCHEN, BLACK, VERLEGER & SHEA, G. WILLIAM SHEA, FRANKLIN H. WILSON, Jupp L. JoRDAN, BRADLEY, CAMPBELL & CARNEY, LEO N. BRADLEY, Attorneys for Petitioner Adolph Coors Company. APPENDIX PERRI En BR haba CSR a 8 2 ee Section 5(a), Federal Trade Commission Act, ch. 311, § 5, 38 stat. 719 (1914), as amended by Act of Feb. 13, 1925, ch. 229, § 2, 43 stat. 939, Act of Mar. 21, 1938, ch. 49, § 3, 52 stat. 111, Act of June 25, 1948, ch. 646, § 32(a), 62 stat. 991, Act of May 24, 1949, ch. 139, § 127, 63 stat. 107, Act of July 14, 1952, ch. 745, § 2, 66 stat. 632, Act of Aug. 23, 1958, Pub. L. 85-726, Title XIV, § 1411, 72 stat. 809, Act of Sept. 2, 1958, Pub. L. 85-909, § 3, 72 stat. 1750 (current version at 15 U.S.C. § 45(a) (Supp. I 1977)). (a) Declaration of unlawfulness; power to prohibit un- fair practices. (i) Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are declared unlawful. (2) Nothing contained in this section or in any of the Antitrust Acts shall render unlawful any contracts or agreements prescribing minimum or stipulated prices, or requiring a vendee to enter into contracts or agree- ments prescribing minimum or stipulated prices, for the resale of a commodity which bears, or the label or container of which bear the trade-mark, brand, or name of the producer or distributor of such commodity and which is in free and open competition with com- modities of the same general class produced or distrib- uted by others, when contracts or agreements of that description are lawful as applied to intrastate transac- tions under any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia in which such resale is to be made, or to which the commodity is to be transported for such resale. cilia (3) Nothing contained in this section or in any of the Antitrust Acts shall render unlawful the exercise or the enforcement of any right or right of action created by any statute, law, or public policy now or hereafter in effect in any State, Territory, or the District of Columbia, which in substance provides that willfully and knowingly advertising, offering for sale, or selling any commodity at less than the price or prices pre- scribed in such contracts or agreements whether the person so advertising, offering for sale, or selling is or is not a party to such a contract or agreement, is unfair competition and is actionable at the suit of any person damaged thereby. (4) Neither the making of contracts or agreements as described in paragraph (2) of this subsection, nor the exercise or enforcement of any right or right of action as described in paragraph (3) of this subsection shall constitute an unlawful burden or restraint upon, or interference with, commerce. (5) Nothing contained in paragraph (2) of this sub- section shall make lawful contracts or agreements pro- viding for the establishment or maintenance of minimum or stipulated resale prices on any commodity referred to in paragraph (2) of this subsection, between manu- facturers, or between producers, or between wholesalers, or between brokers, or between factors, or between retailers, or between persons, firms, or corporations in competition with each other. (6) The Commission is empowered and directed to prevent persons, partnerships, or corporations, except banks, common carriers subject to the Acts to regulate commerce, air carriers and foreign air carriers subject to the Federal Aviation Act of 1958, and persons, Pr, Se partnerships, or corporations insofar as they are subject to the Packers and Stockyards Act, 1921, as amended, except as provided in section 406(b) of said Act, from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce. scalallbeas Spriggs’ Exhibit 80. COORS PRICING POLICY Regardless of geographic location or quantities of purchases, all Distributors pay the same price F.O.B., Golden, Colorado. The Adolph Coors Company requires certain things of its wholesalers, including but not limited to: 1. Refrigerated Warehouses. 2. Adequate, well-qualified employees in clean uni- forms. Necessary insulated, clean trucks. 4. Good community image and relationship. 5. Excellent service to all retailers. In order to maintain a successful wholesale or retail business, pricing integrity is essential. Pricing integrity will resuJt in an adequate and equitable profit to both Distributor and retailer and is fair to the ultimate consumer. It is the policy of the Adolph Coors Company to suggest, if it so chooses, to either the wholesaler or retailer level, suggested minimum pricing. We reserve the right to further that policy by simply refusing to deal with anyone who doesn’t adhere to said policy. ws) The Adolph Coors Company and its agents must only state the policy. They cannot make agreements, threaten, coerce, or intimidate wholesalers or retailers in any manner. They can enforce the policy only by reserving the right to refuse to deal with those who don’t adhere to the suggested prices. Rev. 6-70 Opinion. Adolph Coors Company, Petitioner-Appellant. v. Federal Trade Commission, Respondent-Appellee. No. 73-1567. —_ os United States Court of Appeals, Tenth Circuit. Filed: June 4, 1974. Leo N. Bradley, Golden, Colo. (Earl K. Madsen, Golden, Colo., on the brief), for petitioner-appellant. Robert E. Duncan, Washington, D. C. (Calvin J. Collier, Gen. Counsel, Gerald Harwood, Acting Asst. Gen. Counsel, W. Baldwin Ogden, Washington, D. C., on the brief), for respondent-appellee. Before HOLLOWAY and BARRETT, Circuit Judges, and DURFEE,* Judge Court of Claims. BARRETT, Circuit Judge. Adolph Coors Company appeals an Order to Cease and Desist issued by the Federal Trade Commission. The FTC filed a complaint alleging that Coors was engaged in anticompetitive practices in violation of Sec- tion 5 of the Federal Trade Commission Act.’ An Initial Decision was issued by the Administrative Law Judge after hearings were conducted in Denver extend- ing over a period of thirty days. The Law Judge found that Coors had not violated the Act. He recom- mended that the complaint be dismissed. The FTC appealed the Initial Decision to the five-member Federal Trade Commission. The Commission substituted its findings for those of the Law Judge and found, as *Honorabie James R. Durfee, sitting by designation. 1Section 5 of the Federal Trade Commission Act, 15 U.S.C.A. § 45, provides in part: (a)(1) Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, . are declared unlawful. * * a (6) The Commission is empowered and directed to prevent persons, partnerships, or corporations, ... . from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce. —_ a a matter of law, that Coors had violated Section 5 of the Act.* Adolph Coors Company, a Colorado corporation, is engaged in brewing, distribution and sale of beer, using the trade name of “Coors”. Coors has one brewery in Golden, Colorado, and distributes its beer in an eleven-state area. The beer is sold to the distributors 2The Commissioners ordered that Coors cease and desist from: 1. Entering into, maintaining or enforcing any contract, agreement, combination, understanding or course of conduct which has as its purpose or effect the fixing, maintaining, estab- lishing or setting of the prices at which distributors sell Coors beer to retailers or the prices at which retailers sell Coors beer to consumers. 2. Publishing, disseminating or providing any price list or other document indicating suggested or mandatory prices for the sale of Coors beer by any distributor to any retailer or any price list or other document indicating suggested or manda- tory prices for the sale of Coors beer by any retailer to any consumer. * * * 3. Publishing, disseminating or providing to any distributor or any retailer any information or suggestions concerning what Coors may believe to be an appropriate or proper mark-up or profit for Coors beer when the distributor sells to the retailer or when the retailer sells to the consumer or a mark-up or profit below which the distributor or retailer is advised not to sell Coors beer. * * * 4. Refusing to sell beer to any Coors distributor or terminat- ing or threatening to terminate any Coors distributor because: A. the distributor has in the past or might in the future sell Coors beer at prices, mark-ups, or profits different from those approved or recommended by respondent: B. one or more of the distributor’s customers sold Coors beer or advertised Coors beer for sale at prices, markups, or profits different from those approved or recommended by respondent: C. the Coors distributor sold Coors beer to another dis- tributor or to a retailer whose business is located outside of the territory granted to the distributor; or D. the Coors distributor distributes, has distributed, or proposes to distribute in the future the product of another brewer. 5. Entering into, maintaining or enforcing any contract, agreement, combination, understanding or course of conduct Witter — a who in turn sell to retailers. While Coors is the fourth largest beer brewer in the United States, it alone among the nation’s some 70 brewers is a “shipping” brewery, i.e., Coors ships all of the beer brewed at its single “regional” brewing plant at Golden, Colorado, F.O.B. to the various distributors in Arizona, California, Colo- rado, Idaho, Kansas, Nevada, New Mexico, Oklahoma, Texas (some counties only), Utah and Wyoming. In to fix, establish, limit or restrict the territory in which or the persons to whom a distributor may sell Coors beer. * * * 6. Allocating Coors beers among its distributors in times of beer shortage at the Coors brewery, by any means other than by allocating shares to distributors equal to their proportion- ate purchases of Coors beers from the brewery during the last three months before the allocation or when the distributor has not been in business for more than a year as a Coors distributor, on some other equitable basis. 7. Refusing to deliver all of a distributor's order because the distributor has made sales to customers outside of the territory granted the distributor or because the distributor or the distributor’s customer is selling Coors beer at prices, mark- ups or profits lower than those approved by respondent. 8. Prohibiting its distributors from selling for central ware- house delivery; provided, however, that respondent can establish refrigeration standards for the central warehouse which are sub- stantially similar to those established for distributors and can require its distributors to be responsible, directly or indirectly, for maintenance of such refrigeration standards and for rotation of Coors beer in the central warehouse and at the retail delivery locations where the beer is redelivered from the central ware- house, if respondent changes its container dating system so that the retailer and the consumer will recognize the date without reference to a code or measuring stick. 8. Entering into, maintaining or enforcing any contract, agreement, combination, understanding or course of conduct with its distributors which has as its purpose or effect requiring that retailers serve Coors draught beer as their only light- colored draught beer. 10. Entering into, maintaining, or enforcing any contract, agreement or understanding. cr taking any action or course of conduct with any of its distributors which has as its purpose or effect the requirement that the distributor eliminate, or refrain (This footnote is continued on next page) % a 1971 the average barrel of Coors beer traveled 961 miles to its market place. The beer is made by the aseptic brewing process which requires refrigerated marketing. It is uncontro- verted that Coors beer is substantially more expensive than any other beer consumed in the United States, and yet because of its popularity, Coors has climbed from the 49th largest brewery in 1948 to its number 4 position today. Coors maintains market leadership in total sales agasint all competitors except in its terri- tory served in Texas. Because of the delicacy of the from obtaining and handling rival brands of beer in order to become or remain a Coors distributor. 11. Hindering, suppressing or eliminating competition or at- tempting to hinder, suppress or eliminate competition between or among distributors or between or among retailers handling Coors beer. 12. Cancelling any distributor agreement unless and until the respondent has pursued the following procedure: A. Cancellation With Cause (a) Respondent has given the distributor sixty days’ notice of respondent’s intention to cancel its agreement with the distributor; .. . B. Cancellation Without Cause (a) Respondent has given the distributor one hundred and eighty days’ notice of respondent’s intention to cancel its agreement with the distributor; 13. IT IS FURTHER ORDERED that respondent, within three (3) months from the date this Order becomes final, shall provide for arbitration, in the city in which a distributor resides, by an independent and neutral arbitrator, to determine in the case of any announced termination, and upon the request of a distributor, whether or not said termination is made in good faith (in the case of termination without cause) or whether or not said termination is made in good faith and for material violation of one or more contract provisions which are relevant to the effective operation of the franchise (in the case of termination with cause). * * * * /s/ Charles A. Tobin Secretary ISSUED: July 24, 1973 a product, it is essential that the refrigeration controls and expeditious marketing techniques be strictly moni- tored. Once the beer is delivered to the distributors, this obligation is assumed by them under an agreement with Coors. It is the distributor who is required to protect the “integrity” of the Coors beer quality. by guarding against a retailer’s failure to rotate the beer, and failure to insure proper refrigerated storage. Coors beer retained over 90 days must be destroyed. Coors has 35 area representatives to help market the product. Each representative is assigned certain distributors to work with and .to see that Coors’ Policy Manual is followed. The price Coors charges to its distributors is set by Coors. Coors suggests to its distributors and retailers the price at which to sell its beer. Each distributor is assigned a territory in which to market Coors’ products. Coors may reduce the terri- tory or add distributors to a particular territory. There are 166 independent distributors and one wholly owned subsidiary company. In 1964 Coors eliminated sales to central warehouse accounts. Central warehouse accounts are either re- tailers such as large chain supermarkets who buy for redelivery to their own outlets, or independents who purchase for redelivery to nonaffiliated retail outlets or retailer warehouses. Coors favors draught accounts. It has a draught policy in which tavern owners are given 30 days to discontinue handling other brands of light draught beer. If the owner-retailer continues to sell another brand of light draught beer, Coors discontinues its supply of light draught beer to the tavern. a" The contract between Coors and the distributors en- ables Coors to cancel its contract for any breach by the distributor, with a five-day notice. Either Coors or the distributor may cancel the contract without cause with a 30-day notice. Coors contends that: (1) it did not engage in whole- sale or retail price fixing; (2) its vertically imposed territories are reasonable and legal; (3) it has no policy of requiring exclusive draught accounts; (4) it has the right to protect its quality product and not distribute its beer through central warehousing; (5) its contract termination rights are reasonable and legal; (6) the provisions of the Commission’s Order are not supported by substantial evidence, are not reasonable, and are in conflict with important public policies; (7) the FTC internal procedures have preju- diced its right to a fair hearing; and (8) this court. must exercise its power and set aside the Commissioner’s Order. 5. Coors contends that it did not engage in price fixing agreements with its distributors. Its practices are set out in the Coors Policy Manual which states as follows: In order to maintain a successful wholesale or retail business, pricing integrity is essential. Pric- ing integrity will result in an adequate and equi- table profit to both Distributor and retailer and is fair to the ultimate consumer. It is the policy of the Adolph Coors Company to suggest, if it so chooses, to either the whole- saler or retailer level, suggested minimum pricing. We reserve the right to further that policy by —) simply refusing to deal with anyone who doesn’t adhere to said policy. The Adolph Coors Company and its agents must only state the policy. They cannot make agreements, threaten, coerce, or intimidate whole- salers or retailers in any manner. They can en- force the policy only by reserving the right to refuse to deal with those who don’t adhere to the suggested prices. Coors’ sales manager, Harvey Gorman, testified that the product is controlled by agreeing individually with each distributor. This policy is enforced by a provision in the contract between Coors and the distributor enabling Coors to terminate a distributorship in 30 days without cause. Since there are about 7,000 appli- cants for distributorships, any distributor who does not conform to Coors’ pricing policies could readily be replaced. Coors’ area representatives constantly ob- tain wholesale price information and send the informa- tion to the home office in Golden. The area representa- tives also resolve any conflicts between the prices pro- posed by a distributor and those suggested by Coors. John Hemphill, a former Coors distributor, testified that he would only go so far in making a request to use his own prices, knowing that Coors could ter- minate him in 30 days. He also testified that a Coors’ area representative told him that the best thing for him to do is not to be a distributor if he could not agree to Coors’ policies on pricing and territories. The Law Judge had questioned Hemphill’s credibility because of a suit he has pending against Coors, but the Commissioners rejected this fact as bearing on the issue of credibility. =, = Jay Wagnon, a Coors’ distributor, testified that Coors insisted on controlling distributor price increases and that when he refused to adopt wholesale prices sug- gested by the Coors’ area representative he was sum- moned to Golden and requested to change his prices. He stated that Coors’ personnel told him to bring his prices in line with Coors’ recommendations or they could put another distributor in his area. He testified that he was afraid; that he had been threatened; and that he therefore conformed to the suggested prices. The Law Judge did not find Wagnon’s testimony cred- ible. The Commissioners, on the other hand, found that his testimony was credible. Jay Thurman, a former distributor, testified that he was given pricing sheets by the area representative which were to be followed. He was told that if the prices were changed, it would go through Mr. Straight, a Coors official, who, in turn, would determine if the changes were justified. Peter Tinetti, a former distributor, testified that Coors sent him the prices at which to sell Coors beer. The area representatives submitted reports to the Golden headquarters about agreements or understand- ings they had made with distributors on wholesale prices. Price fixing is illegal per se under the Sherman Antitrust Act. 15 U.S.C.A. § 1; Northern Pacific Rail- way Co. v. United States, 356 U.S. 1, 4-5, 78 S.Ct. 514, 2 L.Ed.2d 545 (1958); United States v. Socony- Vacuum Oil Co., Inc., 310 U.S. 150, 218, 60 S.Ct. 811, 84 L.Ed. 1129 (1940). Price fixing is also illegal per se under Section 5 of the Federal Trade Commission Act. 15 U.S.C.A. § 45. Prices are fixed when they =, = are agreed upon. United States v. Masonite Corporation, 316 U.S. 265, 276, 62 S.Ct. 1070, 86 L.Ed. 1461 (1942). The agreement to fix prices renders the conspir- acy illegal. The agreement may be inferred or implied from the acts and conduct of the parties, as well as from surrounding circumstances. Pearl Brewing Co. v. Anheuser-Busch, Inc., 339 F.Supp. 945 (S.D.Tex. 1972); National Macaroni Manufacturers Association v. Federal Trade Commission, 345 F.2d 421 (7th Cir. 1965). . the test . . . . is whether the agreement, or conduct, interfers with the freedom of sellers or traders in such a manner as to prohibit or restrain their ability to sell in accordance with their own judgment, and not what particular effect the agreement or conduct, has on the actual prices. 339 F.Supp. 945 at 952. The findings of the Commission must be accepted by this court if there is substantial evidence on the record considered as a whole to support them. Uni- versal Camera Corp. v. National Labor Relations Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951). The Commission’s overruling of the Law Judge’s findings on the credibility of two witnesses is not required to be supported by a very substantial preponderance of the evidence. Federal Communica- tions Commission v. Allentown Broadcasting Corp., 349 U.S. 358, 75 S.Ct. 855, 99 L.Ed. 1147 (1955). And where there is a possibility of drawing two incon- sistent inferences from the evidence, the Commission is not prevented from drawing one. National Labor Relations Board v. Nevada Consolidated Copper Corp., 316 U.S. 105, 62 S.Ct. 960, 86 L.Ed. 1305 (1942); National Macaroni, supra. If the inference is supported _ by substantial evidence, it cannot be set aside even though .the court could draw a different inference. National Macaroni, supra. The Commission must consider the initial decision of the Law Judge and the evidence in the record on which it was based. Cinderella Career and Finishing Schools, Inc. v. Federal Trade Commission, 138 U.S. App.D.C. 152, 425 F.2d 583 (1970). But the findings and conclusions of the Law Judge are not sacrosanct and are not necessarily binding on the Commission or the court; they are part of the record to be consid- ered on appeal. OKC Corp. v. Federal Trade Commis- sion, 455 F.2d 1159 (10th Cir. 1972). When the Law Judge and the Commission reach opposite results, the Law Judge’s findings should be considered on review and given such weight as they merit within reason and the light of judicial experience. But this does not modify the substantial evidence rule in any way. OKC Corp., supra. There is substantial evidence from the record as a whole to support the Commission’s findings of price fixing agreements between Coors and its distributors. Coors also challenges the Commission’s finding that Coors has a resale price maintenance program and that it has in some cases secured adherence to its suggested retail prices by unlawful means. There is substantial evidence to support the Commission’s find- ing. Coors’ policy is to establish pricing integrity which means that a certain profit is allowed on each level of resale. Pricing integrity is not possible with price discounting. Coors implements pricing integrity by refus- ing to deal with anyone not adhering to its price sug- — gestions. A Coors’ area representative threatened to refuse sales to an offending retailer unless he would adhere to the prices suggested by Coors. Coors used its distributors to secure retailers’ adherence to suggested minimum prices. One area representative reported that a retailer was cut off by a distributor because the retailer was advertising Coors beer at cut prices. An- other area representative reported that a distributor planned to take appropriate action against a retailer who refused to sell at suggested prices. A distributor reported that Coors beer was not delivered to a retailer who cut prices. An area representative reported that action would be taken against a retailer who refused to raise his prices to a profit level. Mr. Letcher, a retailer, testified that he was selling Coors at special weekend prices and that he was warned by the Coors distributor to discontinue the practice. Letcher refused to cooperate and the distributor termi- nated deliveries to his store. The distributor told Letch- er that deliveries would be received if he would agree not to discount the beer, and that Letcher might lose the retail account if he continued to discount the beer. Letcher was also told by the distributor that Coors does not tolerate price cutting. Letcher sold his business. The distributor resumed deliveries to the new owners who agreed not to discount the beer. The distributor did not act independently in cutting off Letcher as Coors suggests, but cut him off in accordance with Coors’ pricing policies. United States Supreme Court decisions hold that if a manufacturer advances beyond a simple refusal to deal and takes affirmative action to secure compli- ance with its prices, a combination in violation of Section | of the Sherman Antitrust Act and Section a) 5 of the Federal Trade Commission Act occurs. United States v. Parke, Davis & Co., 362 U.S. 29, 80 S.Ct. 503, 4 L.Ed.2d 505 (1960); Federal Trade Commission v. Beech-Nut Packing Company, 257 U.S. 441, 42 S.Ct. 150, 66 L.Ed. 307 (1922). Any trespass on the independence of a reseller or wholesaler to set his own prices is a violation of the Sherman Act. Pearl Brewing Co., supra. A seller may refuse to deal with one failing to adhere to its specified prices, United States v. Colgate & Company, 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992 (1919), but where a concerted effort is used to interfere with the distributors’ pricing independence and to compel them to adhere to suggest- ed prices, there is a violation of the Sherman Antitrust Act. A manufacturer may choose those to whom it will sell to as long as its conduct has no monopolis- tic purposes. Colorado Pump & Supply Company v. Febco, Incorporated, 472 F.2d 637 (10th Cir. 1973), cert. denied 411 U.S. 987, 93 S.Ct. 2274, 36 L.Ed.2d 965 (1973). The Commission found that: .... [Coors] has pursued a policy of fixing, con- trolling and maintaining prices at which Coors beer is sold at both the wholesale and retail level, that in furtherance of this policy it has engaged in various acts and practices such as: suggested resale prices to both distributors and retailers, checking prices at which distributors and retailers sell Coors beer, advising distributors and retailers that it is contrary to Coors pricing policy for them to deviate from prices approved by respond- ent, threatening to terminate distributorships and threatening to force distributors to sell their busi- nesses for refusing to adhere to suggested retail —17— prices, entering into agreements and understand- ings with distributors as to the wholesale prices which the distributors will charge for Coors beer, joining with distributors in attempting to coerce retailers to refrain from selling Coors beer at prices below those approved by respondent, encouraging distributors to prevent retail price cutting by refus- | ing to deliver Coors beer to price cutters, or to reduce the amount of beer delivered, and enter- ing into agreements and understandings with re- tailers as to the retail prices or range of prices at which such retailers will sell Coors beer. There is substantial evidence in the record to support. the Commission’s findings. II. Coors “alleges that its vertically imposed territories are reasonable and legal. The Commission held that Coors vigorously enforces its territorial restrictions and that it has engaged in unlawful price fixing which is: ’ . .. . [s]trong grounds for presuming that the most injurious effects of vertical territorial division may be operative, and, therefore, for holding the entire arrangement of territories with price fixing illegal per se. The Coors’ distributor contract provides, in part, as follows: While this agreement is in effect the Distributor will conduct the business of wholesale distribution of Coors Becr in the above territory only.... In United States v. Arnold, Schwinn & Co., 388 U.S. 365, 87 S.Ct. 1856, 18 L.Ed.2d 1249 (1967), the = United States brought an antitrust action against Ar- nold, Schwinn & Co., an association of Schwinn distrib- utors and a Schwinn distributor, seeking a declaratory judgment to invalidate the distribution franchising sys- tem of its products. Schwinn bicycles are shipped direct- ly to franchised retailers who agree to sell only to ultimate consumers. Schwinn also distributed its bicycles to franchised distributors who agreed not to resell to anyone outside their assigned territories. The Court held that: Under the Sherman Act, it is unreasonable with- out more for a manufacturer to seek to restrict and confine areas or persons with whom an article may be traded after the manufacturer has parted with dominion over it. White Motor, [Co. v. Unit- ed States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963)]; Dr. Miles [Medical Co. v. Park & Sons Co., 220 U.S. 373, 31 S.Ct. 376, 55 L.Ed. 502 (1911)]. Such restraints are so obvi- ously destructive of competition that their mere existence is enough. If the manufacturer parts with dominion over his product or transfers risk of loss to another, he may not reserve control over its destiny or the conditions of its resale. 388 US. at 379. The rule of law in Schwinn is clear and unequivocal. Once the manufacturer has parted with title and risk, he has parted with dominion over the product, and his effort thereafter to restrict terri- tory or persons to whom the product may be transferred—whether by explicit agreement or by silent combination or understanding with his ven- dee—is a per se violation of § 1 of the Sherman Act. 388 U.S. at 382. a ae See Federal Trade Commission v. Sperry & Hutchinson Co., 405 U.S. 233, 247, 92 S.Ct. 898, 31 L.Ed.2d 170 (1972); United States v. Topco Associates, Inc., 405 U.S. 596, 92 S.Ct. 1126, 31 L.Ed.2d 515 (1972); Williams v. Independent News Co., Inc., 485 F.2d 1099 (3rd Cir. 1973); Warriner Hermetics, Inc. v. Copeland Refrigeration Corporation, 463 F.2d 1002 (Sth Cir. 1972), cert. denied 409 U.S. 1086, 93 S.Ct. 688, 34 L.Ed.2d 673 (1972); Beverage Distributors, Inc. v. Olympic Brewing Co., 440 F.2d 21 (9th Cir. 1971), cert. denied 403 U.S. 906, 91 S.Ct. 2209, 29 L.Ed.2d 682 (1971); Fontana Aviation, Inc. v. Beech Aircraft Corporation, 432 F.2d 1080 (7th Cir. 1970), cert. denied 401 U.S. 923, 91 S.Ct. 872, 27 L.Ed.2d 826 (1971). Cf. Carter-Wallace, Inc. v. United States, 449 F.2d 1374, 196 Ct.Cl. 35 (1971); Tripoli Company v. Wella Corporation, 425 F.2d 932 (3rd Cir. 1970), cert. denied 400 U.S. 831, 91 S.Ct. 62, 27 L.Ed.2d 62 (1970); LaFortune v. Ebie, 26 Cal.App. 3d 72, 102 Cal.Rptr. 588 (Cal.Ct.App.1972). Coors, a manufacturer, enters into an agreement with its distributors to distribute Coors beer in the assigned territory only. Coors maintains that the terri- torial restrictions are necessary to retain the quality and proper refrigerated handling of its beer, and that the territorial restrictions are legal. However, since Coors parts with title and risk to the product when it sells and delivers the beer to distributors, and thus has parted with dominion over the product, its further effort to restrict the territories or persons to whom the product can be transferred is a per se violation of Section 1 of the Sherman Act and Section 5 of the Federal Trade Commission Act. Coors may still condition its sales to distributors and others upon main- "a tenance of procedures necessary to control the quality of the product. Although we are compelled to follow the Schwinn per se rule rendering Coors’ territorial restrictions on resale illegal per se, we believe that the per se rule shiculd yield to situations where a unique product re- quires territorial restrictions to remain in business. For example, speed of delivery, quality control of the prod- uct, refrigerated delivery, and condition of the Coors product at the time of delivery may justify restraints on trade that would be unreasonable when applied to marketing standardized products. La Fortune v. Ebie, supra. Perhaps the Supreme Court may see the wisdom of grafting an exception to the per se rule when a product is unique and where the manufacturer can justify its territorial restraints under the rule of reason. White Motor Co. v. United States, 372 U.S. 253, 83 S.Ct. 696, 9 L.Ed.2d 738 (1963). The dissenters in Schwinn contended that the new per se rule cannot be justified, automatically invalidating vertical restraints in a distribution system based on sales to wholesalers and retailers. . . the Court has, sua sponte created a bluntly indiscriminate and destructive weapon which can be used to dismantle a vast variety of distribution- al systems—-competitive and anticompetitive, rea- sonable and unreasonable. 388 U.S. at 394. Thus we are foreclosed from considering the reasonable- ness of the restriction or its business justification. We are cognizant of the unpredictability which is created in relationship to the Coors operation. Coors contends that it Iwas no policy of requiring exclusive draught accounts. Te Commission found that Coors combined with its dis\ributors in the practice of encouraging and coercing \retailers to sell Coors draught beer to the exclusion \of light draught beer competitors in violation of Section 5 of the Federal Trade Commission Act. Mr. Coors testified that exclusive draught accounts were desirable. Several distributors’, testified that the purpose of obtaining exclusive draught accounts is to encourage draught customers to buy béer to take home. To implement the policy, Coors threatened to terminate a retailer's supply of Coors draught keer unless he eliminated competitive draught beers within 30 days. Coors’ distributors did, in fact, take out \their Coors draught. beer if the retailer did not comply with the policy. \ Agreements foreclosing a competitor’s products are unlawful. Federal Trade Commission v. Brown Shoe Co., Inc., 384 U.S. 316, 86 S.Ct. 1501, 16 L,Ed.2d 587 (1966); Fashion Originators’ Guild of America, Inc. v. Federal Trade Commission, 312 U.S. 457, ‘668, 61 S.Ct. 703, 85 L.Ed. 949 (1941); Standard Fashion Company v. Magrane-Houston Company, 258 U.S. 346, 42 S.Ct. 360, 66 L.Ed. 653 (1922). The policy of pursuing an exclusive draught policy violates Section 5 of the Federal Trade Commission Act. There is substantial evidence in the record to support the Com- mission’s finding. IV. Coors asserts that it has the right to protect its quality product and not distribute its beer through central warehousing. The Commission held that Coors’ ae We prohibition of central warehouse sales, or a _ re- quirement that wholesale prices to those accounts equal those to other retailers is a substantial restraint on the capacity of the distributor to resell to whomever he chooses and threatens the same anticompetitive re- sults as other illegal restraints on alienation. Therefore, the Commission found that the practices are unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act. The central warehouse method of distribution in- volves purchase by the warehouser of beer from the brewer or the distributor. The beer is delivered by the retailer to its outlets. This method of distribution could cut the price of the beer to the retailer and consumer. Coors eliminated sales to central warehouse accounts in 1964. The distributors viewed central ware- housing as a threat to the integrity of their territorial restrictions. Coors alleges that sales to central ware- housers affects the quality of its beer because of poor procedures used by the warehousers. The Order imposed by the FTC does not prevent Coors’ distributors from conditioning its sales to central warehouse accounts on the maintenance of procedures necessary to the quality control of its products. The Order only enjoins Coors from requiring its distributors from refusing to sell to central warehouse accounts. The restriction by Coors, limiting those with whom the distributors may deal, amounts to a restriction on resale and violates the mandates of Schwinn and the Federal Trade Commission Act. There is substantial evidence in the record to support the FTC’s finding. a. an V. Coors alleges that its contract termination rights are reasonable and legal and that its conduct in the rare instances of its use has been proper and legal in every respect. The Commission held that: Whether or not any actual terminations of Coors distributors, or sales forced by threat of termina- tion can be ascribed entirely, solely and unambig- uously to the failure of the terminated or coerced distributor to participate in an antitrust violation, it is abundantly clear from the record in this case that Coors representatives have used the ex- plicit or implicit threat or speedy termination is often successful in efforts to force the acqui- escence of its distributors in anti-competitive be- havior. The Coors distributor contract provides in part as follows: This agreement and any supplements now or hereafter effective (whether fixing prices and terms to the Distributor, or otherwise) may be cancelled in entirety at any time by the Company for any breach by the Distributor on five (5) days’ written notice to the Distributor. This agreement and such supplements may be cancelled in entirety by either party without cause upon the giving of notice to that effect to the other party, in which event termination shall become effective thirty (30) days after delivery or the mailing of the written notice of cancellation, whichever first occurs. * * * The Commission held that Coors used the threat of speedy termination to force its distributors into anti- competitive behavior. There is substantial evidence in the record to support the Commission’s holding. — it — Coors has the right to terminate distributors accord- ing to the contract provisions which the distributors have agreed to. Bushie v. Stenocord Corporation, 460 F.2d 116 (9th Cir. 1972). However, it may not use the contract termination provisions to force its distrib- utors into anticompetitive behavior. The Law Judge was correct in stating that the termi- nation provisions of Coors and its distributors, based upon their contractual obligations, are a matter of private contract and are not subject to interference by third parties. The termination provisions are reason- able but may not be used by Coors to force any unlawful conduct. Therefore the Commission’s attempt to rewrite Coors’ contract termination provisions in paragraphs 12 and 13 of its Order must be set aside. The contract termination provisions do not violate Sec- tion 5 of the Federal Trade Commission Act. VI. Coors alleges that FTC internal procedures have prejudiced its right to a fair and impartial hearing. Coors asserts that Mr. Steinitz, a staff attorney of the FTC, performed investigative and prosecuting func- tions in preparing the case against Coors, and that he also participated in the review of the case as attorney- advisor to Commissioner Paul Rand Dixon in violation of 5 U.S.C.A § 554(d) and 16 CFR 4.7(a). Coors’ contention was not raised in the administrative proceeding and therefore is not properly before this court. Moog Industries, Inc. v. Federal Trade Commis- sion, 355 U.S. 411, 78 S.Ct. 377, 2 L.Ed.2d 370 (1958). In any event, Coors’ contention has no merit because Mr. Steinitz, in an affidavit in the record, states that upon leaving FTC's staff he did not discuss = the merits of the Coors case with any of the Commis- sioners or the Commission’s trial staff. There was no error. Vil. Coors alleges that the provisions of the Commission’s Order are not supported by substantial evidence, are not reasonable, are in conflict with important public policies, and must be rejected. It alleges that Paragraphs 4C, 5 and 7, if adopted, would force it to abandon its right to choose those it will authorize to serve as its distributors in its marketing area, eliminating its ability to obtain required ‘market penetration for its survival. Coors states that Paragraph 6, a formula devised by the FTC for beer rationing, is too simplistic to work effectively for Coors. The Order by the Commission is reasonably related to the violations by Coors. The Commission is vested with wide discretion in its choice of remedy to cope with unlawful practices, and its choice will not be disturbed unless it has no reasonable relation to the unlawful practices found. Federal Trade Commission v. Mandel Brothers, Inc., 359 U.S. 385, 79 S.Ct. 818, 3 L.Ed.2d 893 (1959); Jacob Siegel Co. v. Federal Trade Commission, 327 U.S. 608, 66 S.Ct. 758, 90 L.Ed. 888 (1946). Once the Government has borne its burden of establishing violations of the law, all doubts about the remedy are resolved in its favor. United States v. E. I. du Pont de Nemours & Co., 366 US. 316, 81 S.Ct. 1243, 6 L.Ed.2d 318 (1961). We hold that paragraphs 1 through 11 of the FTC’s Order are enforced; paragraphs 12 and 13 of the FTC’s Order are set aside. a HOLLOWAY, Circuit Judge (concurring in part and dissenting in part): I fully concur in the well-reasoned opinion of the court in upholding paragraphs 1 through 11 of the Commission’s order and disagree only as to the setting aside of paragraphs 12 and 13. It is true that paragraphs 12 and 13 require a substantial change in the contract provisions on termina- tion of distributorships. However, the Commission has found that it is abundantly clear the Coors representa- tives have used the explicit or implicit threat of speedy termination in efforts to force acquiescence of its distributors in anticompetitive behavior. We are agreed that there is substantial evidence in the record to support the finding. The Commission has wide discretion in its choice of a remedy deemed adequate to cope with unlawful practices in this area of trade and commerce. See Siegel Co. v. FTC, 327 U.S. 608, 611, 66 S.Ct. 758, 90 L.Ed. 888. The courts interfere only where there is no reasonable relation between the remedy and the violation. Atlantic Refining Co. v. FTC, 381 USS. 357, 377, 85 S.Ct. 1498, 14 L.Ed.2d 443. And orders affecting contractual relationships have been upheld where unlawful practices involved similar subtle pres- sures and threats of termination of dealers’ leases. Id. at 374-375. On this record and the findings made I would uphold as reasonable the Commission’s choice of a remedy to cope with the unlawful practices. Opinion. Copper Liquor, Inc., and Harold Letcher (Robert Earl Basham, Jr., H. A. Anthony and Willis Ray Loving, as the personal representative of Appellee, _—. Harold Letcher, substituted in the place and stead of Appellee, Harold Letcher, Deceased), Plaintiffs-Ap- pellees, v. Adolph Coors Company, Defendant-Appel- lant. No. 73-3913. United States Court of Appeals, Fifth Circuit. Jan. 17, 1975. Rehearing and Rehearing En Banc Denied March 17, 1975. See 509 F.2d 758. , Leo N. Bradley, Golden, Colo., William B. Browder, Jr., Midland, Tex., for defendant-appellant. Vann Culp, Midland, Tex., James R. Warncke, San Antonio, Tex., for plaintiffs-appellees. Appeal from the United States District Court for the Western District of Texas. Before TUTTLE, WISDOM and GEE, Circuit Judges. WISDOM, Circuit Judge: On May 14, 1970, the plaintiff, Harold Letcher,’ a retail liquor-store owner in Brownwood, Texas, brought this action under the Sherman Anti-Trust Act of 1890, §§ 1 and 2,’ against the Adolph Coors 1Mr. Letcher died while the appeal was pending in this Court. The cause of action survives his death. Barnes Coal Corp. v. Retail Coal Merchants Ass’n, 4 Cir. 1942, 128 F.2d 645. A motion for substitution of his executors was allowed. The retail liquor store of which he became sole proprietor in January of 1966 experienced several changes treated fully in this opinion. 5135 US. § 1; Every contract, combination in the form of trust or other- wise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is de- clared to be illegal... 15 U.S.C. § 2: Every person who shall monopolize, or attempt to monopo- lize, or combine or conspire with any other person or (This footnote is continued on next page) Company. Letcher contended that Coleman Distributing Company, a Coors distributor, had refused to deliver Coors beer to him. At trial Letcher abandoned the claim under section two of the Sherman Act, and the court submitted the case to the jury only under section one. The jury found liability and assessed dam- ages of $101,011. The trial court trebled the damages to $303,033, as it was required to do under 15 U.S.C. § 15,° and awarded attorneys’ fees of $75,000. The plaintiff's theory under section one of the Sher- man Act is based on two interrelated contentions. First, Letcher contends that Coors conspired or combined with its distributors to fix the retail price of its beer and caused its distributor, servicing the plaintiff's retail liquor store, to discontinue the supply of Coors beer to the plaintiff when he sold below the suggested retail price and declined to give assurances that he would not do so in the future. Second, Letcher contends that Coors conspired or combined with its distributors to create and enforce exclusive territories within which each distributor was to conduct his business, making it impossible for the plaintiff to obtain a supply of persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor, and, on conviction thereof, shall be punished by fine not exceeding fifty thou- sand dollars, or by imprisonment not exceeding one year, or by both said punishments, in the discretion of the court. 315 U.S.C. § 15: Any person who shall be injured in his business or prop- erty by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in contro- versy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee. —29— Coors beer from another distributor once his original supply had been cut off. We hold that the plaintiff adduced sufficient evidence to show a violation of section one of the Sherman Act, but we remand the case for further proceedings (1) to determine whether the violation caused Letcher injury and, (2) if so, to determine damages in the light of the principles stated in this opinion. I. The Adolph Coors Company, founded in 1873, an entirely family-owned business, is the fourth largest brewer of beer in the United States. All its brewing is done at a single plant at Golden, Colorado, a small town in a little valley in the foothills of the Rocky Mountains. The plant is the largest single brewery in the world. Coors is a “regional” brewer that markets its beer only in ten western states and half of Texas, unlike its three larger competitors, which have estab- lished “branch” breweries at various locations through- out the country and sell in all fifty states. Coors restricted its market area, in large part because of the process by which its beer is brewed. Coors is expanding its capacity at a rate of ten percent a year, all of it internally financed. William Coors, the chief executive officer of the firm, testified as to the care taken in the brewing technique. The water used is nearby Rocky Mountain spring waiter that is remarkably free of microorganisms and organic matter. The flavoring agent for beer is hops; Coors imports a ‘special German hop. There is no accounting for taste. But it is undisputed that this German hop imparts a flavor to Coors beer that, as Coor’s witnesses testified, is “very characteristic — wn and very delicate”. The firm has developed its own variety of brewing barley, and maintains a staff of about fifty persons, some of whom are geneticists and agronomists, to supervise the production of the barley crop. To impart lightness to the beer, Coors dilutes the barley ingredients in the brew with a form of neutral starch obtained from a short-grain variety of rice of Asiatic origin that is twice as expensive as other varieties of rice available for that purpose. Mr. Coors concluded, “Coors beer is by a wide margin the most expensive beer made from the standpoint of the raw materials and the processing.” According to his testimony, the brewing process at Coors takes about eighty days, as compared with forty days at the breweries of one of its three largest national com- petitors and twenty days at the breweries of another of the three national competitors. Mr. Coors testified that Coors beer is brewed in an “aseptic” process, rather than by a technique employ- ing pasteurization. In this process the firm employs refrigeration and rotation of stock so that beer past a certain age is removed from the marketplace. Special refrigerated railroad cars or other refrigerated vehicles are used in transporting the beer from Golden to the distributors, who must maintain the Coors beer in refrigerated warehouses and vehicles until it is delivered to the retailers. The retailers, in turn, are urged to keep it refrigerated until the ultimate consumer pur- chases it. Coors, its distributors, and its outlets maintain substantial efforts to reduce the exposure of the beer to light, heat, and agitation, for these factors have an adverse effect upon the flavor of the beer. Distribu- tors have heavy responsibilities to maintain Coors’s standards in this regard. a Coors limits its market to the states of California, Arizona, Nevada, Utah, Idaho, Wyoming, Colorado, New Mexico, Kansas, and Oklahoma, and to roughly the northern half of the state of Texas. This is about the same market Coors has enjoyed since the 1930s, after the repeal of Prohibition. Expansion of the firm is directed more toward increasing market penetration within areas already serviced than toward expanding the geographical area serviced. This policy is dictated by the centralization of Coors’s brewing facilities. For example, the average shipment to the California market for Coors is thirteen hundred miles, while the average shipment of Budweiser in California is around one hundred miles. Coors beer is sold to the distributors at one price, f. o. b. Golden. Since the distributor pays the freight, the cost of shipment works a substan- tial practical limitation on the expansion of the market area. Moreover, Coors has experienced for many years a shortage of production capacity to meet the existing demand within the geographical area currently serviced by its distributors. Mr. Coors characterized market penetration within that area as crucial to the firm’s survival. Since the beer is sold only in a limited area, a large amount of advertising expense is saved, so that per barrel the firm spends on advertising only a quarter of what its major competitors spend. In part, this saving is made possible, as Professor Cundiff, Coors’s marketing expert, testified, because Coors beer enjoys a high degree of customer loyalty and brand identification unusual, if not unique, in the beer market in the United States; and the savings, of course, help offset the transportation disadvantage. Coors enters into distributorship agreements for cer- tain geographical territory granting to the distributor = a “non-assignable, non-exclusive, personal right to en- gage in the wholesale distribution of the companv’s beer products” within the described territory. The dis- tributor promises to conduct his wholesale distribution exclusively within the prescribed territe~y. The agree- ment provides that either party m°, cancel the agree- ment without cause with thirty days’ written noiice, and that Coors may cancel the agreement “for any breach by the distributor” upon five days’ written notice. Coors has such agreements with 160 distributors within its market area. A Coors distributorship is highly sought after; the company has about 7,090 applications on file. Mr. Coors testified that without the territorial restrictions imposed in the agreements, it would be difficult if not impossible to maintain the efficiency of the distribution system. Although one entering into a distribution agreement with Coors pays nothing for the right granted him, the distributor must make a substantial capital expenditure to establish refrigerated facilities for warehouses, trucks, and related equipment. Mr. Coors stated that unless the distributor could be assured that he would not be confronted with competi- tion from another Coors distributor within his territory —-assured that there would be no intrabrand competi- tion—the distributor would be unwilling to make the necessary capital expenditure, and lending institutions would be unwilling to extend credit to him. Aside from difficulties intrabrand competition among distributors would create in attracting capital, Mr. Coors indicated that such competition, if permitted, would eventually erode the firm’s market penetration. In the short run, so he said. intrabrand competition among distributors wold primarily manifest itself in wholesale nrice cqm- netition and nerhaps lower retail prices in comretition in service. However, as time passed, the weaker of those who had been able to make the capital expenditure to undertake a non-caclusive distributorship would be eliminated from the competition, the “price” of competi- tion would decline, and there would be a rise in the level of wholesale prices. In the long run, the effect of such competition on the smaller retail accounts would, he thought, be highly undesirable. Because there is almost always a shortage of Coors for the ‘market area, the company allocates the supply with two primary goals: maintaining retail price stability and servicing the maximum number of retail outlets within the area with a supply as dependable as possible, so that consum- er exposure and prompt stock rotation are promoted. Coors employs a computer to help balance its produc- tion capability with the inventory requirements of the distributors. ~ Mr. Coors and Professor Cundiff implied that in the earlier phrases of intrabrand competition, distrib- utors would concentrate their efforts on the larger ac- counts to the detriment of the smaller accounts. They stressed that having more than one distributor respon- sible for a given geographical area would make it difficult for the company to monitor the treatment of the beer to ensure its proper refrigeration and rotation so that beer over sixty days old would be removed from the market. Additional problems arise in the case of draught beer, since it is the responsibility of the distributor to make sure that the draught facilities in retail establishments are properly cleaned and main- tained. The flavor of beer is especially susceptible to deterioration if this responsibility is not meticulously discharged. Moreover, with exclusive distributorships, it is easier for the supplier to supervise compliance a with state statutes and rules regulating the sale of alcoholic beverages. On the pricing policies of Coors there is, of course, conflicting evidence. Mr. Coors testified that the com- pany occasionally suggests to its distributors both whole- sale and retail prices to ensure to both distributors and retailers a fair return on their investment and effort. He stated that the company has no policy regard- ing dealing with retailers who sell Coors beer at a discount, but that from time to time the company and its distributors try to persuade retailers not to sell at a discount, primarily because a larger than usual volume of sales disrupts the orderly allocation of Coors’s supply, which generally is ‘ess than the demand. Mr. Coors and other witnesses for the com- pany denied that it had ever terminated or threatened to terminate a distributorship on any ground related to its pricing suggestions. They maintained that the company had no power to direct its distributors to deal or to refuse to deal with particular retailers, or to otherwise interfere with the relationship between distributor and retailer, and that the company did not do so. Its terminations of distributorships were based upon a breach of the agreement or upon poor per- formance within an assigned territory. It was not dis- puted, however, that the company’s right to terminate the distributorship without cause on short notice was a formidable one because of the substantial investment in equipment primarily suitable for the distribution of Coors. There was evidence, sharply contested, that one distributorship in Texas, owned by a Mr. Dixon, had been terminated because the distributor refused to cut off the supply of certain retailers who had sold Coors at a discount. But there was also evidence a oe that distributorships were held at the time of trial by individuals who had declined to abide strictly by the territorial limitations or to take any action to drive home to the discounting retailer the company’s displeas- ure with the discounting. There was also evidence that from 1966 to the time of trial Coors beer was in fact advertised at a discount by retailers doing business in the general vicinity of the plaintiff's store in Brown- wood, Texas. | Letcher acquired a sole proprietorship in the Brown- wood store in January of 1966. About the same time, Coors entered the Brownwood market. Letcher adver- tised Coors at less than his own cost, using it as a “loss leader”. Coleman, the distributor for that area, spoke to Letcher and to Mrs. Williams, an employee at the time, later a partner, and still later a shareholder in the business. She testified that Coleman said that he could not deliver any more Coors to them unless Letcher would promise not to offer it at a discount. Letcher refused to make that promise. Mrs. Williams testified that Coleman replied, “Well, it isn’t my fault, I would like to sell you the beer but the brewery won't let me” and “I have a $100,000.00 investment here and I can’t take a chance on losing it.” There were some further deliveries after this exchange, but when Letcher again advertised Coors at a discount, the deliveries terminated, on June 3, 1966. Coleman resumed deliveries in August 1971, after Letcher had sold his interest in the store. Coleman, on the other hand, testified that Letcher’s advertising Coors at a discount had nothing to do with his discontinuing service to the Brownwood store. Coleman said that he did not get along well with Letcher on a personal level, that Letcher demanded — = a wholesale discount, that he did not give Coors ade- quate storage space, and that the beer was not adequate- ly displayed to the customers. In these circumstances, he testified, he determined not to do business with Letcher. According to the records introduced at trial, Coors had no knowledge of Coleman’s refusal to service Letcher until July 1966. Campbell, Coors’s represen- tative in that part of Texas and its liaision with Cole- man, testified that he became aware of Coleman’s refus- al to service Letcher only after the initial termination in June of 1966, when Letcher wrote to the company to see if he could obtain a supply directly from the brewery. He interviewed the two men individually. He found the source of the difficulty to be a difference of opinion as to how the beer should be treated at the retail store, colored by mutual dislike. He advised Letcher that he could not force Coleman to do business with him because Coleman was wholly independent in this respect. Business records Coors introduced into evidence, however, tend to support Letcher’s version of the difficulties experienced with the distributor.‘ ‘For example, the report of Mr. Campbell, Coors’ field repre- sentative, to his superior at the firm, dated August 20, 1966, reads in part: Bill Reed called me Monday morning and said that a Mr. Letcher (owner of the Handy Liquor Store in Brown- wood) wanted to buy beer from him. Stuart Coleman, our Brownwood distributor, is not servicing Mr. Letcher because he has been advertising our beer at cut rate prices. I filled Bill Reed in on this situation, and Mr. Letcher was informed that Reed only had enough beer to supply the retailers he has been supplying. His report of July 16, 1966, stated in part: One problem developed from a local liquor store which is cutting Coors prices and advertised same in the news- paper. Mr. Coleman stopped delivery to this retailer [Letcher] and the retailer wrote Golden a complaint claiming Mr. ~ —115— “(t]he ‘relevant period’ as sometimes referred to in these findings of fact is the four years preceding the filing of the cross-complaint on Oc- tober 18, 1965.” } Finding of Fact 16, C.T. 263. In Copper Liquor, Inc. v. Adolph Coors Co., 506 F.2d 934 (Sth Cir. 1975), the plaintiff was a retailer named Letcher who did not acquire his store until 1966: Letcher acquired a sole proprietorship in the Brownwood store in January of 1966. A:bout the- same time, Coors entered the Brownwood market.” 506 F.2d at 939. 7 Thus, Copper Liquor clearly involved a different time period. Moreover, the relevant geographic market in Copper Liquor had been designated as “the market for beer in Brownwood, Texas.” 506 F.2d at 950. There was no question that the relevant geographic market in this case was the market for beer in Los Angeles County, California. See, e.g., Findings of Fact 3, 4, 7, 13, 14, 15, Conclusions of Law 8, 10, 11, C.T. 260-65. The Copper Liquor judgment concerning events in Brownwood, Texas after January 1, 1966 is not relevant evidence of events in Los Angeles County, California prior to October 18, 1965. %* oS *% Finally, the plaintiff in Copper Liquor was a retailer who claimed that Coors refused to deliver beer to him because he was selling Coors below his own cost: “Letcher advertised Coors at less than his own cost, using it as a loss leader.” 506 F.2d at 939. —116— Copper Liquor thus involved a retailer selling Coors as a loss leader to attract other business. Such conduct by a Coors distributor in California would be both suicidal and illegal. In Rice v. Alcoholic Beverage Control Appeals Board, 21 Cal. 3d 431, 146 Cal. Rptr. 585, 579 P.2d 476 (1978), the California Su- preme Court recently noted that California law ex- pressly prohibits the saie of any product as a “loss leader.” “Finally, we find persuasive the argument that there are other means to achieve the fundamental goals of the price maintenance laws without run- ning afoul of the Sherman Act. Thus, our laws prohibit the sale of any product as a ‘loss leader’ (Bus. & Prof. Code § 17044) and licensees may not offer any gift or premium in connection with the sale of alcohol (§ 25600).” 21 Cal. 3d at 458 (emphasis added). B. FTC DID NOT INVOLVE CLEARLY IDENTI- CAL ISSUES OF FACT AND THERE IS NO REFERENCE IN FTC TO LOS ANGELES COUNTY AT ANY TIME PERIOD, RELE- VANT OR OTHERWISE, OR TO SPRIGGS In Adolph Coors Co. v. FTC, 497 F.2d 1178 (10th Cir. 1974), the Court of Appeals and Federal Trade Commission both relied very heavily upon the testimony of Mr. Letcher, the plaintiff in Copper Liquor, supra: “Mr. Letcher, a retailer, testified that he was selling Coors at special weekend prices and that he was warned by the Coors distributor to discon- tinue the practice. Letcher refused to cooperate and the distributor terminated deliveries to his store. The distributor told Letcher that deliveries DP ditricinicc.: sie SS —117— would be received if he would agree not to discount the beer and that Letcher might lose the retail account if he continued to discount the beer. Letcher was also told by the distributor that Coors does not tolerate price cutting. Letcher sold his business. The distributor resumed deliveries to the new owners who agreed not to discount the beer. The distributor did not act independently in cutting off Letcher as Coors suggests, but cut him off in accordance with Coors’ pricing policies.” 497 F.2d at 1185. As discussed above, Coors dealings with Letcher clearly involved different conduct in a different state at a different time and at a different level of distribution from Spriggs. Moreover, the FTC opinion affirmed an equitable decree operating prospectively from July 24, 1973. 497 F.2d at 1181-82 n.2. Especially in view of FTC’s reliance on the testimony of the plaintiff in Copper Liquor, supra, it is far from certain that FTC involved identical conduct at an identical time and place. In the absence of certainty that FTC involved identical issues of fact, application of collateral estoppel is clearly improper under Bernhard and Eichler, supra. Indeed, the only references to activities of Coors in California in FTC were to the Oakland and Sacramento areas; there is no reference to any conduct of Coor in Los Angeles County at any time period, relevant or other- wise, and no reference to Spriggs. Both the process by which the FTC comes to its conclusions embodied in an order and the limited judicial review of that order point out the lack of factual identity required for collateral estoppel. As —118— stated in Lee National Corp. v. Atlantic Richfield Co., 308 F. Supp. 1041 (E.D. Pa. 1970): “In such Federal Trade Commission proceedings the function of the Court is somewhat limited in its review of administrative proceedings. More- over, such proceedings contemplate, not an anti- trust action or a treble damage action, as here, but rather the discovery of ‘unfair methods of competition’, by ‘an administrative body of prac- tical men’ for the purpose of eradicating business ‘evils’ in an early or incipient stage. The Court’s inquiry is concerned with the order of the Com- mission; whether it acted within the scope of the authority vested in it; whether there was ‘warrant in the record’ for its findings and conclusions; whether there is a ‘reasonable basis in law’ for its order with particular reference, in some in- stances, to the reasonableness of the remedy re- flected in the order. Language used by the Court in thus reviewing a Commission’s order may not be taken out of context and used as the basis for a summary judgment in proceedings of a differ- ent nature such as a private treble damage action.’ 308 F. Supp. 1047. The foregoing was quoted approvingly in Belliston v. Texaco, Inc., 455 F.2d 175, 183 (10th Cir.), cert. denied, 408 U.S. 928 (1972), the Circuit that affirmed the order in FTC. Finally, the judgment of the Court of Appeals affirm- ing the equitable decree in FTC determined only that there was substantial evidence to support the findings of the administrative agency, and did not determine # | a : —119— that Coors had violated the antitrust laws. 497 F.2d at 1184-86. * * a C. DEL RIO EXPRESSLY REJECTS APPLICA- TION OF COLLATERAL ESTOPPEL BASED ON COPPER LIQUOR OR FTC The United States Court of Appeals for the Fifth Circuit, the court that decided Copper Liquor, recently refused to give collateral estoppel effect to that decision in Del Rio Distributing, Inc. v. Adolph Coors Co., supra. The decision in the Del Rio case was called to this Court’s attention in Coors’ post-hearing letter dated March 9, 1979. The plaintiff in Del Rio had been a Coors distributor from December 1966 until its termination by Coors on December 1, 1971. Del Rio sued alleging violations of the antitrust laws by Coors by means of “fixing of wholesale and retail prices and the limiting of territories wher» Coors beer could be resold.” 589 F.2d at 177. Following an adverse jury verdict and denial of motions for new trial or judgment n.o.v., Del Rio appealed and raised the argument that Copper Liquor and FTC should be given collateral estoppel effect. “Del Rio contends that adverse judgments en- tered against Coors in Adolph Coors Co. v. Federal Trade Commission, 497 F.2d 1178 (10th Cir. 1974), and Copper Liquor, Inc. v. Adolph Coors Co., 506 F.2d 934 (Sth 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 Liquor is that it was decided under the per se rule of Schwinn that has now been replaced by the rule of reason under Sylvania. =, oo “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 Federal Trade Com- mission had overturned the decision of an adminis- trative law judge who had found no violation of the act. In reaching its decision on vertically imposed territorial 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 appli- cation in the instant case.” 589 F.2d at 179. (Footnote omitted. ) In Spriggs II this Court has concluded that collateral estoppel can be given both defensive and offensive effect, analogizing it to both a sword and a shield. However, the correct analogy is that collateral estoppel has become in Spriggs II an erratic spear, which cannot be thrown forward in time from Brownwood, Texas to Del Rio, Texas, but which has the mysterious power to travel backward in time from Brownwood, Texas clear to Los Angeles, California. II. A JUDGMENT AFFIRMING AN FTC ORDER UN- DER SECTION 5 OF THE FTC ACT IS NOT ADMISSIBLE IN PRIVATE SUITS An order affirming a decree under section 5 of the Federal Trade Commission Act, 15 U.S.C.A. § 45, which is much broader than the Clayton and Sher- man Acts, is not a judgment “under the antitrust laws” under section 5(a) of the Clayton Act, 15 U.S.C.A. —121— § 16(a) and is not admissible in a private treble damages action. See North Carolina v. Chas. Pfizer & Co., Inc., 537 F.2d 67 (4th Cir.), cert. denied, 429 U.S. 870 (1976); New Jersey Wood Finishing Co. v. Minnesota Mining & Mfg. Co., 332 F.2d 346 (3d Cir. 1964), aff'd on other grounds, 381 USS. 311 (1965); In re Antibiotic Antitrust Action, 333 F. Supp. 317 (S.D.N.Y. 1971); Proper v. John Bene & Sons, Inc., 295 F. 729 (E.D.N.Y. 1923). If it is not clear whether an FTC order was issued under the antitrust laws or under the FTC Act, the order is not admissible in a private antitrust suit. See Y. & Y. Popcorn Supply Co. v. A.B.C. Vending Corp., 263 F. Supp. 709 (E.D. Pa. 1967). In North Carolina v. Chas. Pfizer & Co., Inc., supra, for example, the Fourth Circuit emphasized that the FTC complaint under § 5(a) of the FTC Act “was an administrative proceeding, not a judicial trial,” which is a distinction of such magnitude as to prevent its use for estoppel purposes. 537 F.2d at 74. First, the Court declared. the difference between the FTC Act of the antitrust laws is such that: “The issue before the Commission was whether the respondents in that proceeding were guilty of unfair methods of competition in violation of Section 5 of the Federal Trade Commission Act which is a regulatory statute much broader in its scope than the Clayton and Sherman Acts under which the present litigation was instituted.” 537 F.2d at 74. Second, the Court observed that the rules of pro- cedure varied drastically, as did the consequences: “The Commission did not require that the alieged fraud on the Patent Office be demonstrated by q —122— clear and convincing evidence and employed evi- dentiary and procedural rules much more lenient than those incident to a judicial trial * * * ““The Federal Trade Commission is regulatory in nature; the Sherman Act is penal as well as civil; the consequences flowing from each Act are quite dissimilar. The proceedings themselves. and the rules governing them and the legal prin- ciples applicable to each are distinct.’ ” 537 F.2d at 74, quoting United States v. Chas. Pfizer & Co., 205 F. Supp. 94, 96 (S.D.N.Y. 1962). Third, the Fourth Circuit observed, “by the very terms of the Federal Trade Commission Act, proceed- ings under section 5 appear to be incompatible with the doctrine of collateral estoppel.” 537 F.2d at 74. Noting that section 5(e) of the FTC Act, 15 U.S.C. § 45(e), did not permit FTC orders to absolve any “person, partnership or corporation from any liability under the Antitrust Acts,” the Fourth Circuit declared: “It would be strangely unfair to permit the Gov- ernment to litigate under the Sherman or Clayton Acts an issue earlier decided against it in a Section 5 proceeding, and at the same time deny to a respondent the right to defend on the same issues in a subsequent antitrust suit brought by a plain- tiff who was not even a party to the adminis- trative proceeding.” 537 F.2d at 74. Finally, the Fourth Circuit noted that § 5(a) of the Clayton Act, 15 U.S.C. § 16(a), limited final judgments or decrees under the Antitrust laws to only —123— prima facie evidence in subsequent proceedings. Con- cluded the Court: “c . it would be paradoxical to accord a Section 5 administrative proceeding the absoute effect of collateral estoppel when a court deter- mination in a criminal action that a defendant had violated the Sherman Act is limited to only prima facie effect.” 537 F.2d at 74. In the instant case, the FTC judgment is not ad- missible because it merely affirmed an order under section 5 of the FTC Act. 497 F.2d at 1180. Section 5(a) of the Clayton Act, 15 U.S.C.A. § 16(a), provides that judgments in actions brought by the United States under the Sherman Act (but not the FTC Act) create at most a rebuttable presumption. E.g., Purex Corp. v. Procter & Gamble Co., 453 F.2d 288, 291 (9th Cir. 1971), cert. denied, 405 USS. 1065 (1972) (“takes no question of fact from either court or jury ... [n]lor does it in anywise work a denial of due process of law.”) See Sam Fox Pub- lishing Co. v. United States, 366 U.S. 683, 690 (1961) (Clayton Act § 5 “definitive legislative pronouncement that a government suit cannot be preclusive of private litigation” ). * * * In response a question from the trial court, Mr. Coors testified specifically that during the period in question, territories were not imposed for the purpose of carrying at pricing policy: “I think we can get at it this way: Sir, having in mind your testimony concerning the policy of Coors during the period in question concerning =) pricing, did your comany impose territorial lines with respect to distributorships for the purpose of carrying out its pricing policy? “THE WITNESS: I don’t see the connection, Your Honor. I think I would have to answer that in the negative.” R.T. 356-57. * *K * As the Court has acknowledged, “failure to find on the issue of price-fixing—would, at most, call for a retrial on the issue of liability. . . .” Slip op. at 22. _ CONCLUSION Conclusive application of the doctrine of collateral estoppel on the basis of judgments not involving identi- cal facts to preclude Coors from a trial on the issue of liability is contrary to federal and state law and constitutes a denial of due process. Coors therefore petitions this Court to grant a rehearing for the reasons stated. —125— Modification* of Opinion (94 Cal.App.3d 419, — Cal. Rptr. —) on Denial of Petition for Rehearing. R. E. Spriggs Company, Inc., et al., Cross-com- plainants and Appellants, v. Adolph Coors Company, Cross-defendant and Respondent. THE COURT.—It is ordered that the opinion filed herein on June 26, 1979, be modified in the following particulars: : At the end of the last full paragraph on page 22 [94 Cal.App.3d 419, 431, advance report, end of the 2d full par.| after the word “scheme” add as footnote 12, the following: “Coors points out that in Del Rio Distributing, Inc. v. Adolph Coors Co. (Sth Cir. 1979) 589 F.2d 176, 178 (petition for cert. filed, No. 78-1876, June 18, 1979), a panel of the very court which decided Copper Liquor upheld a trial court’s refusal to give the F.T.C. and Copper Liquor judgments preclusive effect, reasoning that it would be inappropriate to do so once Schwinn had been overruled. Frankly, we are not persuaded by that court’s narrow legal view of the doctrine of collateral estoppel, even though we think that Coors was bound by the same court’s factual determination that Coors’ territorial restrictions were ‘ancillary to an illegal price fixing scheme.’” The petition for a rehearing is denied. *This modification requires the movement of text affecting pages 431-432 of the bound volume report. ite Coors’ Petition for Hearing in the Supreme Court of California. To the Honorable Ros [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385006_1341%3A1. Public record. Not legal advice.