Court Opinion

ID: 8900402
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:01:13.239616+00
Date Added: 2024-06-11T17:07:47.981678
License: Public Domain

COLEMAN, Circuit Judge:
This is a rather unusual antitrust case. The private plaintiff was not enchanted by dreams of treble damages. Defendants candidly admitted all factual allegations. Nevertheless, there was summary judgment for the defendants. We affirm.
Alleging violations of Section 1 of the Sherman Act1 and Section 7 of the Clayton Act,2 Universal Brands brought suit under Section 16 of the Clayton Act3 to enjoin the consummation of an agreement, dated April 3, 1974, by which Philip Morris4 acquired from Lowenbrau the exclusive distributorship of Lowenbrau beer in the United States. Due, however, to an existing distributorship contract between Lowenbrau and Hans Holterbosch, Inc., scheduled to expire April 1,1975, defendants agreed that initially the newly acquired rights would be limited to a fifteen state region, not including Florida. As to Florida the importation-distribution rights would be delayed until either a termination agreement could be reached between Lowenbrau and Holterbosch or the Holterbosch contract expired, whichever happened the sooner.
Holterbosch instituted an action against Lowenbrau for breach of contract and against Philip Morris and Miller Brewing for tortiously inducing the breach. The Supreme Court of the State of New York for New York County held that there had been no extension of the existing contract between Holterbosch and Lowenbrau and that Holterbosch had no contractual rights to import Lowenbrau beer beyond April 1, 1975. Hans Holterbosch, Inc. v. Philip Morris, Inc., et al. (Index No. 10769-74) (March 17, 1975). No appeal was taken.
Universal Brands, the plaintiff-appellant had never had a contract with either Lowenbrau or Philip Morris. Instead, it had an arrangement with Holterbosch, by which it purchased Lowenbrau, as desired or needed, from that organization.
Upon expiration of Holterbosch’s contract with Lowenbrau, Philip Morris began marketing Lowenbrau beer in Florida. In southeast Florida, the area in which the plaintiff had been distributing beer after buying it from Holterbosch, Philip Morris selected three other distributors to market the beer, displacing plaintiff from its former position as sole distributor of this admittedly high-profit product.
Understandably disgruntled with this turn of events, plaintiff filed suit against Lowenbrau and Philip Morris, seeking both injunctive and declaratory relief. Lowenbrau challenged the jurisdiction of the District Court, asserting that it was not amenable to the reach of the Florida long arm statute. Upon examination of the factors involved in this issue, we are of the opinion that the District Court erred not in holding against Lowenbrau, Dinsmore v. Martin Blumenthal Associates, Inc., Fla., 314 So.2d 561 (1975); AB CTC v. Morejon, Fla., 324 So.2d 625 (1975).
The gravamen of plaintiff’s claim is that defendants’ 1974 agreement violated the antitrust laws by unreasonably restraining trade and substantially lessening competition in the domestic and imported beer markets in southeast Florida.

Plaintiff’s Sherman Act Claims

Contracts and conspiracies in restraint of trade are unlawful, Section 1 of the Sher*33man Act. Although the statute speaks in terms of “restraint of trade”, the courts have long ago concluded that only such conduct as unreasonably restrains trade is to be proscribed. See, e. g., Standard Oil Co. v. United States, 1911, 221 U.S. 1, 61, 31 S.Ct. 502, 55 L.Ed. 619; Chicago Board of Trade v. United States, 1918, 246 U.S. 231, 238, 38 S.Ct. 242, 62 L.Ed. 638; United States v. Arnold Schwinn & Co., 1967, 388 U.S. 365, 374, 87 S.Ct. 1856, 18 L.Ed.2d 1249.
Accordingly, a manufacturer has a right to select its customers and to refuse to sell its goods to anyone, for reasons sufficient to itself. United States v. Colgate & Co., 1919, 250 U.S. 300, 39 S.Ct. 465, 63 L.Ed. 992. And it is not a per se violation of the antitrust laws for a manufacturer or supplier to agree with a distributor to give him an exclusive franchise, even if this means terminating another distributor. See United States v. Arnold Schwinn & Co., supra, 388 U.S. at 376, 87 S.Ct. 1856.
Moreover, it is not a per se violation for a manufacturer or supplier to contract, combine, or conspire with others to make a change in an existing exclusive franchise, thus cutting off the supply of a former distributor. Burdett Sound, Inc. v. Altec Corporation, 5 Cir. 1975, 515 F.2d 1245, 1248, 1249.
As has been recently stated:
“ . . . [I]t is indisputable that a single manufacturer or seller can ordinarily stop doing business with A and transfer his business to B and that such a transfer is valid even though B may have solicited the transfer and even though the seller and B may have agreed prior to the seller’s termination of A.”
Ark. Dental Supply Co. v. Cavitron Corp., 3 Cir. 1972, 461 F.2d 1093, 1094.
To like effect, see Burdett Sound, Inc. v. Altec Corporation, supra, 515 F.2d at 1249; Joseph E. Seagram & Sons, Inc. v. Hawaiian Oke & Liquors, Ltd., 9 Cir. 1969, 416 F.2d 71, 78, cert. den., 396 U.S. 1062, 90 S.Ct. 752, 24 L.Ed.2d 755, reh. den., 397 U.S. 1003, 90 S.Ct. 1113, 25 L.Ed.2d 415.
This does not mean, however, that a manufacturer’s or supplier’s discretion as to whom it will sell is unlimited. If the refusal to deal is a device used to acquire a monopoly,5 or to fix prices,6 or to establish market dominance and drive out competí-, tors,7 or is part of a boycott,8 it is illegal.
Viewed in this context, the fallacy of plaintiff’s Sherman Act case is apparent. The summary judgment proceedings established no facts that Holterbosch’s loss of its distributorship and Universal’s loss of its source of supply will have any anti-competitive effect upon the business of selling beer in southeastern Florida. No facts have been either alleged or shown which could support a claim that Philip Morris and Lowenbrau entered into their agreement with an eye toward engaging in any of the prohibited acts mentioned in the preceding paragraphs.
Plaintiff did not compete, and had never competed, with either Lowenbrau or Philip Morris. As and when it chose to do so, it merely bought Lowenbrau products from Holterbosch. Any anti-competitive aspects of the defendants’ alleged wrongdoing would fall not on plaintiff, but on others, if any, who were national distributors or importers of foreign beers. Admittedly, plaintiff is neither.
Additionally, when Universal Brands was not chosen to continue distributing Lowenbrau beer, its place in the distributorship chain was taken by three smaller local distributors, whose combined share of the total area beer market was less than had been enjoyed by the plaintiff.9 Moreover, after *34Holterbosch’s contract had expired, plaintiff acquired the distributor rights to Becks Beer, another European import.

Plaintiff’s Clayton Act Claims

Defendant Philip Morris states that “[tjhere is no dispute between plaintiff and defendant as to the controlling legal standard which governs the question of Universal’s standing to maintain this antitrust suit”. The test relied on by both parties, known as the “target area” test, was set forth in Dailey v. Quality School Plan, Inc., 5 Cir. 1967, 380 F.2d 484, 487-88. However, both parties fail to recognize that this criterion applies only to claims brought under § 4 of the Clayton Act, 15 U.S.C. § 15. And as we noted, plaintiff does not attempt to recover under this section.
This Court has recently delineated the important distinctions between an action under § 4 and one under § 16, such as the plaintiff brings.
Unlike § 4 of the Clayton Act, § 16 has no business or property requirement. The complainant “need only demonstrate a significant threat of injury from an impending violation of the antitrust laws or from a contemporary violation likely to continue or recur.” . Moreover, the remedies contained in the two sections are quite distinct. Section 16 carries none of the risk of potentially disastrous monetary judgments or duplicative recoveries. . . . Because of these differences, courts take a less constrained view of standing in suits involving injunctive relief than in those demanding treble damages. ... To achieve standing under § 16, the petitioner must demonstrate that he is threatened with loss or injury proximately resulting from the antitrust violation.

Hence, the pivotal issue for standing under § 16 is proximate cause.

Jeffrey v. Southwestern Bell, 5 Cir. 1975, 518 F.2d 1129, 1132 (citations and footnotes omitted) (emphasis added).
Under Section 16’s standing rule, the plaintiff need only show that he is threatened with injury proximately caused by the defendants. Tugboat, Inc. v. Mobile Towing Co., 5 Cir. 1976, 534 F.2d 1172, 1174. But, as we have observed:
A mere showing by the private plaintiff of a violation of the anti-trust laws has no actionable significance because, while in a government action there need be established only an antitrust violation, a private litigant “ ‘must not only show the violation of the antitrust laws, but show also the impact of the violations upon him,’ i. e., some injury (or threatened injury where injunctive relief only is sought) proximately resulting from the antitrust violation.”

Credit Bureau Reports, Inc. v. Retail Credit Company, 5 Cir. 1973, 476 F.2d 989, 992.

It follows then, that if the damage was merely subordinate, incidental or indirect, or if the defendants’ alleged antitrust acts are so distant from the injury as to be only remotely causative, plaintiff has not been injured “ ‘by reason of anything forbidden in the antitrust laws’ as contemplated by the Clayton Act”. Dailey v. Quality School Plan, Inc., supra, 380 F.2d at 487.
What do the undisputed facts establish? Plaintiff has shown that Holterbosch was the exclusive importer and distributor for Lowenbrau beer in the eastern United States, including southeastern Florida; that for a 5-year period, plaintiff purchased Lowenbrau beer from Holterbosch for resale in its area; that Holterbosch’s contract with Lowenbrau expired by its own terms on April 1,1975, and was not renewed; that after that date, Philip Morris became the exclusive United States importer of Lowenbrau beer; and that Philip Morris thereafter appointed three new wholesalers to distribute Lowenbrau beer in southeastern Florida, to the exclusion of plaintiff.
The plaintiff’s claims of injury are based entirely on business lost when it could no longer buy Lowenbrau beer from Holterbosch. Plaintiff lost its distributorship because Holterbosch no longer had a contract. Even if Holterbosch lost its right of distribution due to the acts of the defendants, *35the law is clear that “one who is only incidentally injured by a violation of the antitrust laws, — the bystander who was hit but not aimed at, — cannot recover against the violator.” Perkins v. Standard Oil Co., 1969, 395 U.S. 642, 649, 89 S.Ct. 1871, 1875, 23 L.Ed.2d 599 (emphasis in original).
Universal’s ease boils down to an argument that although it had never had a contractual relationship with either Lowenbrau or Philip Morris and had depended solely on a source of supply which dried up on the expiration of the source’s contract, an expiration which would have occurred in the absence of any Lowenbrau-Philip Morris contract, it may now bring an antitrust action against those who chose not to give the source a new contract.
Moreover, the flow of Lowenbrau to southeast Florida has not been cut off. It has simply been diverted to three distributors, where formerly there had been only one.
We know of nothing in the antitrust statutes or corresponding case law which would require either of the defendants to make a new contract with Holterbosch or which would require that either of them enter into a new and hitherto unexisting contract with Universal. The rights of those who manufacture and sell beer in competition with Lowenbrau, or who distribute beer in competition with Philip Morris, are not at stake in this litigation.
As we conceive it, there was no genuine issue of material fact which, if resolved in favor of Universal, could have entitled it to recover against either of the appellees. We therefore hold that there was no error in granting summary judgment.

Discovery

Universal Brands vigorously complains of being denied full and complete discovery prior to the entry of summary judgment.
On the motions for summary judgment, the defendants conceded as true all of the factual allegations of the complaint and appearing in Universal’s answers to interrogatories. Having done this, defendants moved for a stay of discovery pending the resolution of the summary judgment motions. The District Court granted the stay.
Universal sought to set aside the stay, so as to allow “complete discovery insofar as it relates to the issues raised by the motions”. The District Court held a hearing on Universal’s request and asked it to identify any relevant facts which had not been conceded by the defendants, saying that plaintiff would be given every opportunity to take discovery on any such issues. The Court told counsel for Universal:
Let’s define those issues and then, if we are going to have some discovery on those issues, that is finé. You can let us know what it is and then let us do it. ******
THE COURT: Is that a sound approach or is that out in left field?
Does that violate the rights of the plaintiff, because I don’t want to do that, either.
MR. ANDERSON [counsel for Universal]: Not at this point, it certainty doesn’t, Your Honor.
I have no reason to object to that because it doesn’t foreclose us from what we think we are entitled to do. We haven’t reached that point.
As you say, it might put an insurmountable burden on the defendants.
THE COURT: It could, because that is what they are saying.
Let us do that. Confer with your attorneys. If you have any quarrel with any of the facts that they say they are relying on, let me know.
If you want to take a deposition or two, that is fine, and I will modify the order. If you want to take Williams’ deposition, if he is the one that filed an affidavit, I think you are entitled to cross examine somebody who files an affidavit.
Given this opportunity to establish those areas into which it desired further discovery, plaintiff responded with a sixteen-page statement, which did not in any way illuminate the areas in which discovery might be helpful to the Court in its task. *36Nevertheless, the defendants conceded all of the allegations contained in Universal’s statement, whereupon the Court left the stay in effect.
The District Court gave the plaintiff every opportunity to demonstrate the need for additional discovery. Defendants met every allegation by admitting it to be true. There just was not anything left to “discover” prior to considering summary judgment.
There can be no doubt that in appropriate situations plaintiffs in antitrust cases are entitled to discovery prior to the entry of a summary judgment, Littlejohn v. Shell Oil Co., 5 Cir. 1973, en banc, 483 F.2d 1140. Littlejohn likewise teaches, however, see 483 F.2d 1145, that this entitlement lives only so long as there are factors which discovery might clear up, having some bearing on whether summary judgment should be entered. The dispute in Littlejohn was whether there had been as much as one sale in interstate commerce by any defendant. The defendants denied it; the plaintiff said he could not know without discovery. We held that if plaintiff amended his complaint to allege such a sale then he should be allowed to proceed with discovery. That is not the situation we now have before us. Here, defendants conceded all factual points. The question was whether these conceded facts raised an antitrust issue. The stay of discovery was not error, especially not when the Court persisted in calling for some material necessity for discovery and the plaintiff came forward with none.
We are of the opinion that the summary judgment was correctly entered and the Judgment of the District Court is
AFFIRMED.

. 15 U.S.C. § 1.

. 15 U.S.C. § 18.

. 15 U.S.C. § 26.

. Although Miller Brewing Company is the entity through which Philip Morris conducts its beer operations, we will refer only to Philip Morris for purposes of this discussion.

. Burdette Sound, Inc. v. Altec Corporation, supra, 515 F.2d at 1248.

. FTC v. Beech-Nut Packing Co., 1922, 257 U.S. 441, 42 S.Ct. 150, 66 L.Ed. 307.

. Lorain Journal Co. v. United States, 1951, 342 U.S. 143, 72 S.Ct. 181, 96 L.Ed. 162.

. Klors, Inc. v. Broadway-Hale Stores, Inc., 1959, 359 U.S. 207, 79 S.Ct. 705, 3 L.Ed.2d 741.

. Before the switch in distributors, Universal had 16.9% of beer sales in southeast Florida compared to a combined share for the three smaller distributors of approximately 12.8%.