Opinion ID: 693413
Heading Depth: 3
Heading Rank: 2

Heading: Scope of Contract

Text: 14 Having concluded that the Coors-Molson arbitration clause encompasses antitrust disputes, we turn to Coors's second argument and determine whether Coors's claims are within the scope of the contract. Coors argues that its claims are unrelated to the contract and that the antitrust dispute is therefore not subject to the contractual arbitration agreement. We hold that some of Coors's antitrust causes of action are within the scope of the Coors-Molson licensing agreement and that some of Coors's claims are outside the scope of that contract. 15 Although the Supreme Court in Mitsubishi reversed the First Circuit's holding that public policy prohibited the involuntary arbitration of antitrust claims, it adopted and affirmed the First Circuit's determination that the antitrust claims were within the scope of that contract. See Mitsubishi, 473 U.S. at 618 n. 1, 622 n. 9, 628, 105 S.Ct. at 3349 n. 1, 3351 n. 9, 3354-55. 7 The First Circuit's discussion of the contract in Mitsubishi emphasized that the antitrust claims were closely related to the contract because they turned upon specific contractual provisions. Mitsubishi, 723 F.2d at 159-61. The First Circuit phrased its initial inquiry as whether the factual allegations underlying Soler's counterclaims--and Mitsubishi's bona fide defenses to those counterclaims--are within the scope of the arbitration clause. Id. at 159. The First Circuit then emphasized that Mitsubishi's refusal to allow Soler to transship cars was premised upon concerns that Soler would not produce quality products and that such considerations were relevant to assessing the legality of Mitsubishi's actions under Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 97 S.Ct. 2549, 53 L.Ed.2d 568 (1977). 8 The First Circuit concluded that because Mitsubishi based its refusal to deal on concerns about trademarks, reputation, and goodwill--considerations that the contract specifically addressed--the antitrust claims were within the scope of the contract: We need not delve further into the merits of Mitsubishi's defense, however, for it is enough for present purposes that its trademark and goodwill concerns are plainly germane to Soler's antitrust allegations. Mitsubishi, 723 F.2d at 160. 16 Explicitly basing its opinion on this connection between the contract and the antitrust claims, the First Circuit concluded that the antitrust claims were within the scope of the contract. An arbitration clause does not extend to all disputes of any sort ... but only to disputes touching specified provisions of the agreement. Id. at 159. The First Circuit's basis for holding the antitrust claims to be within the scope of the contract thus logically limits the Supreme Court's holding in Mitsubishi to antitrust claims that have a reasonable factual connection to the contract. In this case, Mitsubishi provides no support for categorically concluding that Coors must take all of its antitrust claims to arbitration. We therefore hold that Coors's antitrust claims that do not implicate the contract are litigable. 17 In addition to basing our opinion limiting contractual arbitration of antitrust suits to those antitrust claims related with a contract upon Mitsubishi, there are practical reasons to read Mitsubishi in a more limited way than Molson suggests. As Molson's counsel acknowledged at oral argument, its interpretation of Mitsubishi is that every brewer in America except Coors may bring an antitrust action against Molson. Although Mitsubishi allowed parties to a contract to compel the arbitration of their antitrust disputes, it did not proclaim that all disputes between parties who include an arbitration clause in their contracts are subject to arbitration. A dispute within the scope of the contract is still a condition precedent to the involuntary arbitration of antitrust claims. See AT & T Technologies, Inc. v. Communications Workers of Am., 475 U.S. 643, 648, 106 S.Ct. 1415, 1418, 89 L.Ed.2d 648 (1986) (holding that arbitration is a matter of contract and that a party cannot be required to submit to arbitration any suit it has not agreed to arbitrate). A contrary reading of Mitsubishi not only ignores the facts of that case, but also could lead to absurd results. For example, if two small business owners execute a sales contract including a general arbitration clause, and one assaults the other, we would think it elementary that the sales contract did not require the victim to arbitrate the tort claim because the tort claim is not related to the sales contract. In other words, with respect to the alleged wrong, it is simply fortuitous that the parties happened to have a contractual relationship. Similarly, in this case, Coors is entitled to litigate its antitrust claims regarding the Miller-Molson relationship in a public forum so long as the claims are not related to the licensing agreement. 18 Molson next argues that the policy behind arbitration supports staying the antitrust litigation until the arbitration has resolved factual issues that are the basis for the antitrust litigation. See, e.g., Institute of Mission Helpers v. Reliance Ins. Co., 812 F.Supp. 72, 76 (D.Md.1992) (observing that a stay can conserve judicial resources and avoid anomalous results). However, Molson cites no authority for the proposition that the courts of the United States must defer to an ongoing arbitration simply because the facts and parties may be similar. Conversely, the Supreme Court has held that litigation must proceed in a piecemeal fashion if the parties intended that some matters, but not others, be arbitrated. Dean Witter Reynolds, Inc. v. Byrd, 470 U.S. 213, 221, 105 S.Ct. 1238, 1242-43, 84 L.Ed.2d 158 (1985); see also, Armco Steel Co. v. CSX Corp., 790 F.Supp. 311, 317 n. 4 (D.D.C.1991) (Any alleged 'intertwining' of [the] contract claim with the other claims of [the] complaint does not require the Court to submit the entire complaint to arbitration. The 'intertwining' approach ... was rejected by the Supreme Court in Dean Witter....). 19 Finally, Molson relies upon one commentator for the proposition that a general arbitration clause will subject all antitrust disputes to arbitration unless they are specifically excluded. Anyone involved in an ongoing commercial relationship must be aware that a general arbitration clause now can require arbitration of an antitrust dispute, even if the clause predates Mitsubishi and the arbitration process and arbitrator selected are ill-suited to an antitrust dispute. Donald I. Baker & Mark R. Stabile, Arbitration of Antitrust Claims: Opportunities and Hazards For Corporate Counsel, 48 Bus.Law. 395, 407-08 (1993). 9 This is good advice, especially for the risk-averse audience of corporate counsel for whom it is intended. Had Coors explicitly exempted antitrust disputes from its arbitration clause, it could have avoided this round of litigation. 20 However, a close reading shows that the Baker & Stabile article actually supports Coors in this case. The article is mainly intended to advise joint-venture partners and others engaged in continuing relationships concerning the terms of their contract how they can avoid arbitrating their antitrust disputes. Id. at 398-99. 10 In this case, it is only the claims not related to Coors's and Molson's continuing contractual relationship that are litigable. 21
22 We reiterate that Coors may litigate antitrust claims not related to the licensing agreement just as anyone else with standing may. Coors's claims regarding market concentration are not related to the licensing agreement, and Coors may therefore litigate those claims. 23
24 Coors's claims regarding confidentiality and proprietary information involve the Coors-Molson licensing agreement. Like the First Circuit in Mitsubishi, we conclude that the contractual arbitration clause controls this dispute. Molson gained access to the Coors information because of the parties' contractual relationship. Also under the terms of their contract, both parties agreed to arbitrate claims arising from this contract. We therefore reverse the district court and hold that Coors must keep its promise to arbitrate its allegations involving confidential product and marketing information. 25
26 Coors's least developed and most novel claim is that Miller's control over Molson will have an anti-competitive effect on the United States and North American beer markets. Coors argues that Miller holds a seat on Molson's board of directors, that Molson's bylaws require a unanimous vote of all directors, and that Miller may thus be in a position to control the distribution of Coors products. This claim presents the most difficult question because Coors has not specifically stated how Miller's control over Molson will create anti-competitive effects. However, Molson has not argued that Coors has failed to meet the requirements of notice pleading. See, e.g., American Nurses' Ass'n v. Illinois, 783 F.2d 716, 723 (7th Cir.1986) (discussing the advent of notice pleading); Charles Alan Wright, Law of Federal Courts Sec. 68, at 475-76 (5th ed. 1994) (arguing that district courts should not require more detailed pleadings in complex antitrust and securities litigation than they do in cases of ordinary complexity, and collecting cases). In addition, we note that one commentator has suggested that advertising may be a legitimate antitrust issue in the beer industry. 11 27 Without making a final judgment as a matter of law on any theory, we conclude that Coors has presented a sufficient factual outline to suggest that it might develop a theory unrelated to the Coors-Molson licensing agreement. Coors is therefore entitled to conduct discovery and refine its theories. However, we do not make a final judgment on any control theory because the record before us is insufficient to allow it. At a later point in this litigation, Molson may again challenge Coors's claims, with respect to both their relation to the licensing agreement and their legal sufficiency. At that point, with additional briefing and discovery, we believe that the district court will be in the proper position to make appropriate findings of fact and reach conclusions of law.