Page-1 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

Michael G. Hanlon, OSB No. 792550

Law Offices of Michael G. Hanlon, P.C.

101 SW Main St, Suite 825

Portland, OR 97204

Tel: 503-228-9787

Fax: 503-224-4200

mgh@hanlonlaw.com

J. Robert Robertson, Pro Hac Vice

Hogan Lovells US LLP

555 Thirteenth St, NW

Washington, DC 20004

Tel: 202-637-5774

Fax: 202-637-5910

robby.robertson@hoganlovells.com

Attorneys for Defendant SABMiller plc

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

MEDFORD DIVISION

JAMES DEHOOG, BRIAN

BOUTELLER, SHONNA BOUTELLER,

CARLY BOWEN, TOM

BUTTERBAUGH, ERICA I. CORONA,

MARIA G. CORONA, CHRIS

DENNETT, JOHN DESBIENS,

MATTHEW JOHNSON, CYNTHIA A.

KREITZBERG, EDWARD LAWRENCE,

JERUSHA MALAER, ROBERT

MALAER, MICHEAL MARTIN,

MICHAEL MCATEE, DAVID

MILLIGAN, JEFF REEDER, RALPH

REEDER, WADE SCAGLIONE, BETH

H. SILVERS, BRADLEY O. SILVERS,

and PATRICIA WADE,

Plaintiffs,

v.

ANHEUSER-BUSCH INBEV, SA/NV, and

SABMILLER PLC,

Defendants.

Case No. 1:15-cv-02250-CL

DEFENDANT SABMILLER PLC’S

MOTION TO DISMISS PLAINTIFFS’

COMPLAINT FOR FAILURE TO

STATE A CLAIM

Pursuant to Fed. R. Civ. P. 12(b)(6)

Request For Oral Argument

Case 1:15-cv-02250-CL Document 43 Filed 02/03/16 Page 1 of 8
Page-2 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

Motion

LR 7-1(a) Certification. Pursuant to Local Rule 7-1(a), the undersigned counsel certify

that they have conferred with Plaintiffs’ counsel by telephone in a good faith effort to resolve the

dispute and have been unable to do so.

Defendant SABMiller plc, through its undersigned counsel, hereby moves to dismiss with

prejudice Plaintiff’s Complaint for Injunctive Relief in the above-captioned action. The grounds

for this motion include Federal Rule of Civil Procedure 12(b)(6), in that Plaintiffs cannot use the

Clayton Act, § 7, to sue the seller in a transaction, as explained in the accompanying

Memorandum of Law in Support of Defendant SABMiller plc’s Motion to Dismiss. Additional

grounds for this motion are set forth in the separate motion to dismiss and memorandum of law

filed by Defendant Anheuser-Busch InBev, SA/NV, which is incorporated herein by reference in

its entirety.

Memorandum of Law

Plaintiffs’ Complaint against Defendant SABMiller plc (“SAB”) should be dismissed

with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6) for the simple reason that

SAB is the seller in the transaction challenged by Plaintiffs under Section 7 of the Clayton Act,

and Section 7, by its terms, does not apply to sellers. Plaintiffs’ Complaint also fails for the

numerous additional reasons set forth in the separate motion to dismiss and memorandum of law

filed by Defendant Anheuser-Busch InBev, SA/NV (“ABI”), which we join and incorporate

herein by reference in its entirety.

///

///

///

Case 1:15-cv-02250-CL Document 43 Filed 02/03/16 Page 2 of 8
Page-3 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

BACKGROUND

Defendants ABI and SAB are international brewing companies with headquarters in

Belgium and the United Kingdom, respectively. (See Compl. ¶¶ 9, 13.) In October 2015, ABI

announced its intention to acquire a controlling stake in SAB. (Id. ¶ 16.) SAB has an ownership

interest in MillerCoors LLC, a joint venture with Molson Coors Brewing Company (“Molson”),

but does not directly market or sell beer in the United States. (See id. ¶¶ 14, 33.) ABI will not

acquire SAB’s affiliated U.S. businesses, and throughout the transaction, SAB acts only as a

seller. Consummation of the transaction is conditioned on regulatory approval by antitrust

authorities in the United States. (See id. ¶ 19.)

Plaintiffs are a group of individuals who purchase beer. (Id. ¶ 8.) After the

announcement of the ABI-SAB transaction, Plaintiffs filed a Complaint asking this Court to

enjoin consummation of the deal for an alleged violation of Section 7 of the Clayton Act, 15

U.S.C. § 18. (See id. ¶¶ 99-101.)

LEGAL STANDARD

The Court may dismiss any complaint that fails to state a claim upon which relief can be

granted. Fed. R. Civ. P. 12(b)(6). “To survive a motion to dismiss, a complaint must contain

sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows

the court to draw the reasonable inference that the defendant is liable for the misconduct

alleged.” Id. (citing Twombly, 550 U.S. at 556). A court will not be able to draw such an

inference when the plaintiff offers only “‘labels and conclusions’” or “naked assertion[s]’ devoid

of ‘further factual enhancement.’” Id. (alteration in original) (quoting Twombly, 550 U.S. at 555,

Case 1:15-cv-02250-CL Document 43 Filed 02/03/16 Page 3 of 8
Page-4 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

570). “Dismissal is proper where there is either a lack of a cognizable legal theory or the

absence of sufficient facts alleged under a cognizable legal claim.” Hinds Invs., L.P. v. Angioli,

654 F.3d 846, 850 (9th Cir. 2011) (citation omitted).

ARGUMENT

I. Plaintiffs Cannot State a Claim Against Any Defendant.

Defendant SAB here incorporates by reference the grounds for dismissal articulated in

the motion to dismiss and memorandum of law filed by ABI. For the reasons set forth in those

materials, Plaintiffs cannot state a claim for relief against any defendant under Section 7 of the

Clayton Act. (See Mem. of Law in Supp. of Def.’s Mot. To Dismiss Pls.’ Compl.) SAB joins

those arguments and urges the Court to dismiss the entirety of Plaintiffs’ Complaint with

prejudice.

II. Plaintiffs Cannot State a Claim Against SAB Because SAB is Not an Acquirer.

The Court should dismiss Plaintiffs’ claims against SAB for the separate reason that

Plaintiffs allege that SAB is the proposed seller of assets to ABI, and Section 7 of the Clayton

Act, the only grounds for liability pled in the Complaint, imposes liability only on acquirers, not

sellers. (Compl. ¶¶ 33; 99-101). Section 7 commands that “[n]o person engaged in

commerce . . . shall acquire . . . the stock or other share capital . . . of another

person . . . where . . .the effect of such acquisition may be substantially to lessen competition, or

tend to create a monopoly.” 15 U.S.C. § 18 (Emphasis added).1 The language of the statute

reflects Congress’ clear intent to hold liable only the party who “acquire[s],” not those whose

1

The plain meaning of this text is the primary, if not exclusive, guide to its application.

See United States v. Am. Bldg. Maint. Indus., 422 U.S. 271, 282-83 (1975) (“[N]either the

legislative history nor the remedial purpose of [Section 7] of the Clayton Act, as amended and

re-enacted in 1950, supports an expansion of the scope of [Section 7] beyond that defined by its

express language.”).

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Page-5 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

shares or assets are acquired. See, e.g., Dailey v. Quality Sch. Plan, Inc., 380 F.2d 484, 488 (5th

Cir. 1967) (“[Section] 7 by its terms proscribes only the acquiring corporation.”). Ninth Circuit

law is clear that Section 7 of the Clayton Act does not impose liability on sellers. United States

v. Coca-Cola Bottling Co. of L.A., 575 F.2d 222, 227 (9th Cir. 1978) (citing, inter alia, Dailey,

380 F.2d at 488) (“By its express terms [Section] 7 proscribes only the act of acquiring, not

selling, when the forbidden effects may occur.”). Consequently, Section 7 plaintiffs can seek no

relief against the seller in transactions. See, e.g., Gerlinger v. Amazon.com, Inc., 311 F. Supp. 2d

838, 852 (N.D. Cal. 2004) (“As a result, a [S]ection 7 claim for monetary damages, as a matter of

law, does not exist against the person or entity selling the assets but rather must be brought

against the acquiring person or entity.” (alteration in original) (internal quotation marks

omitted)). The Ninth Circuit is not alone; numerous courts around the country have reached the

precisely same result, and held that sellers cannot be liable under Section 7.2

Although a plain reading of Section 7 should resolve the issue of SAB’s liability, a

comparison of Section 7 to other parts of the Clayton Act shows that Congress clearly indicated

when it intended to hold sellers liable. Section 3, for instance, makes it “unlawful for any person

2

See Goss Int’l Ams., Inc. v. Man Roland Inc., No 03-CV-513-SM, 2005 WL 2998531, at

*3 (D.N.H. Nov. 8, 2005) (citing Coca-Cola Bottling Co. of L.A., 575 F.2d at 227; Dailey, 380

F.2d at 488); United States v. Dairy Famers of Am., Inc., No. Civ. A 03-206KSF, 2004 WL

2186215, at *8 (E.D. Ky. 2004) (citing Dailey, 380 F.2d at 488), rev’d on other grounds, 426

F.3d 850 (6th Cir. 2005); Geneva Pharm. Tech. Corp. v. Barr Labs. Inc., 201 F. Supp. 2d 236,

278 (S.D.N.Y 2002), aff’d in part, rev’d in part on other grounds, 386 F.3d 485 (2d Cir. 2004);

Berlyn, Inc. v. The Gazette Newspapers, Inc., 157 F. Supp. 2d 609, 623 (D. Md. 2001) (citing

Dailey, 380 F.2d at 488); Arbitron Co. v. Tropicana Prod. Sales, Inc., No. 91 Civ. 3697 (PKL),

1993 WL 138965, at *4 (S.D.N.Y. Apr. 28, 1993); Zenith Radio Corp. v. Matsushita Elec. Indus.

Co., 513 F. Supp. 1100, 1329 n.399 (E.D. Pa. 1981) (citing Dailey, 380 F.2d at 488); Tim W.

Koerner & Assocs., Inc. v. Aspen Labs, Inc., 492 F. Supp. 294, 300 (S.D. Tex. 1980), aff’d mem.

sub nom. Koerner & Assoc. v. Aspen Labs, 683 F.2d 416 (5th Cir. 1982); Palmer News, Inc. v.

ARA Servs., Inc., 476 F. Supp. 1176, 1193 (D. Kan. 1979) (citing Coca-Cola Bottling Co., 575

F.2d at 227-28); Record Club of Am., Inc. v. Capitol Records, Inc., No. 70-Civ-3315-HRT, 1971

WL 558, at *6 (S.D.N.Y. Sept. 8, 1971) (citing Dailey, 380 F.2d at 488).

Case 1:15-cv-02250-CL Document 43 Filed 02/03/16 Page 5 of 8
Page-6 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

engaged in commerce. . . to lease or make a sale or contract for sale of goods[.]” 15 U.S.C. § 14.

The Ninth Circuit interprets Section 3 as the inverse of Section 7: The former “defines liability in

terms of a person who makes a sale or contracts for sale and nowhere provides for liability of the

buyer[,]” while the latter “applie[s] only to an acquiring corporation and not to the corporation

being acquired.” McGuire v. Columbia Broad. Sys., Inc., 399 F.2d 902, 906 (9th Cir. 1968)

(emphasis added) (citing Dailey, 380 F.2d at 488).

A strict reading of Section 7 also avoids the absurd result of potentially imposing liability

on the target of a hostile acquisition for a combination the target tried to prevent. Cf. Consol.

Gold Fields plc v. Minorco, S.A., 871 F.2d 252, 258 (2d Cir. 1989) (holding that target of hostile

tender offer has antitrust standing under Section 7). Section 7 simply does not apply to sellers,

and therefore the Court should dismiss Plaintiffs’ claims against SAB.

Further, SAB does not need to remain in the case in order for the Court to effect any

equitable relief, should that prove necessary.3 The Ninth Circuit only has required joinder of a

seller in order to effect relief where an acquisition has already been consummated and the

plaintiff seeks an equitable remedy to restore the assets to the seller. See Coca-Cola Bottling Co.

of L.A., 575 F.2d at 226, 229-30 (joining seller in challenge to consummated transaction ); see

also Cmty. Publishers, Inc. v. Donrey Corp., 892 F. Supp. 1146, 1175 (W.D. Ark. 1995) (same);

United States v. Phillips Petroleum Co., 367 F. Supp. 1226, 1228-30, 1262 (C.D. Cal. 1973)

(same); United States v. Pabst Brewing Co., 183 F. Supp. 220, 220-22 (E.D. Wis. 1960) (same).

This situation simply does not apply here because, as Plaintiffs admit, Defendants have not

3

Plaintiffs have failed to join the actual acquirer of SAB’s U.S. business, Molson, and

equitable relief is therefore wholly inappropriate under Section 7. See Arbitron Co., 1993 WL

138965, at *7 (“[S]ince the acquiring company is not a party, the equitable remedies fashioned in

[other Section 7] cases are unavailable and any claim for equitable relief under [S]ection 7, like

the claim for monetary damages, would clearly be futile.”).

Case 1:15-cv-02250-CL Document 43 Filed 02/03/16 Page 6 of 8
Page-7 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

consummated their transaction and will not do so until regulators have approved the deal. (See

Compl. ¶¶ 19, 101). No assets have been transferred from SAB to ABI that the Court would ever

have to restore to SAB. Plaintiffs therefore cannot seek any rescission or divestiture that would

require joinder of SAB in this case. As a result, Plaintiffs’ claim against SAB should be

dismissed.

CONCLUSION

For the reasons stated above, SAB requests that the Court dismiss Plaintiffs’ Complaint

with prejudice.

DATED this 3rd day of February, 2016.

/s/ Michael G. Hanlon

Michael G. Hanlon OSB #792550

Law Offices of Michael G. Hanlon, P.C.

101 SW Main St, Suite 825

Portland, OR 97204

Tel: 503-228-9787

Fax: 503-224-4200

mgh@hanlonlaw.com

J. Robert Robertson (Pro Hac Vice)

Hogan Lovells US LLP

555 Thirteenth St, NW

Washington, DC 20004

Tel: 202-637-5774

Fax: 202-637-5910

robby.robertson@hoganlovells.com

Attorneys for SABMiller plc

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Page-8 Defendant SABMiller plc’s Motion to Dismiss Plaintiffs’ Complaint

CERTIFICATE OF COMPLIANCE

This brief complies with the applicable word-count limitation under LR 7-2(b), 26-3(b),

54-1(c), or 54-3(e) because it contains 2,192 words, including headings, footnotes, and

quotations, but excluding the caption, table of contents, table of cases and authorities, signature

block, exhibits, and any certificates of counsel.

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