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February 27, 1974

Todhunter-Mitchell & Co., Ltd.
Anheuser-Busch, Inc.

Bechtle, D.J.

The opinion of the court was delivered by: BECHTLE


BECHTLE, District Judge.

 This is a private antitrust action brought under Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, in which continuing violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1 and 2, are alleged. Plaintiff seeks injunctive relief and treble damages.

 Plaintiff, Todhunter-Mitchell & Co., Ltd. ("Todhunter-Mitchell"), a wholesale distributor of liquor and beer in the Bahama Islands, contends that defendant, Anheuser-Busch, Inc. ("Anheuser-Busch"), has unlawfully restrained its wholesale distributors in the Houston and Atlanta regions from reselling Budweiser beer outside of their respective designated territories. Specifically, Todhunter-Mitchell asserts that the defendant combined and conspired with its Miami and New Orleans distributors to enhance and preserve the economic position of Bahama Blenders, Ltd. ("Bahama Blenders"), the Anheuser-Busch distributor in the Bahamas, by restraining those other distributors from selling and exporting Budweiser beer to the plaintiff, a competitor of Bahama Blenders. The plaintiff has been unsuccessful in repeated attempts to purchase Budweiser beer from wholesalers located in Miami and New Orleans for import into the Bahamas for retail sale there. Anheuser-Busch asserts that its refusal to deal with the plaintiff (such refusal manifested through the failure or refusal of the Anheuser-Busch distributors in Miami and New Orleans to sell wholesale quantities of Budweiser beer to Todhunter-Mitchell) represents action taken unilaterally by defendant and motivated by legitimate marketing considerations relating to quality control and potential over-supply of the product and not for any anti-competitive motive pursuant to any unlawful agreement or understanding with the distributors involved herein. The issue presented for this Court's determination is whether the restrictions imposed on the distributors by Anheuser-Busch constituted an unreasonable restraint of trade in violation of Section 1 of the Sherman Act. This Opinion contains the findings of fact and conclusions of law which constitute the grounds for this Court's decision with respect to the present proceedings.

 Findings of Fact

 1. Plaintiff, Todhunter-Mitchell, is a Bahamian corporation with its principal place of business in Freeport, Grand Bahama Island. It is engaged in the production, bottling, and sale of gin, vodka, and various cordials; the blending, bottling, and sale of rum, bourbon, and whiskeys; and the sale of beer. Todhunter-Mitchell imports beer into the Bahamas from the United States and Europe and resells such beer solely on Grand Bahama Island. A. Kenneth Pincourt, Jr., is the president of Todhunter-Mitchell. Until his death in 1971, Arthur K. Pincourt, Sr., was the secretary-treasurer of Todhunter-Mitchell. At all times relevant to this litigation, plaintiff had a subsidiary, Dave Streiffer Company ("Streiffer"), a ship's chandler in New Orleans, Louisiana. Joseph M. Lichtenstein, Jr., is the president of Streiffer.

 2. Defendant, Anheuser-Busch, is a Missouri corporation with its principal place of business in St. Louis. It is the country's biggest brewer of beer, with 1971 sales of over 24 million barrels (produced in 8 breweries located at St. Louis, Missouri; Houston, Texas; Los Angeles, California; Newark, New Jersey; Columbus, Ohio; Jacksonville, Florida; Tampa, Florida, and Merrimack, New Hampshire) and distributed principally through about 950 wholesalers. Its beer division had sales of $832,183,000 in 1971, representing approximately 19% of the brewing industry sales volume. Anheuser-Busch's brands are Michelob, Budweiser, and Busch-Bavarian. The Anheuser-Busch distribution points principally involved in this litigation are:

 (a) National Brands, Inc. ("National Brands") -- This is a Florida corporation with its principal place of business in Miami. It is the duly-appointed Anheuser-Busch wholesaler in the Miami area and elsewhere in southern Florida. Jerome Blank is the president, and Marvin S. Florman is its general manager. National Brands has continued to be the Anheuser-Busch wholesale distributor for the southern Florida area until the present time.

 (b) A & B Distributors, Inc. ("A & B") -- A & B was a Louisiana corporation with its principal place of business in New Orleans. Until May, 1969, this operation, then independently owned, was the Anheuser-Busch wholesaler in the New Orleans area. In May, 1969, Anheuser-Busch acquired certain of the assets of the A & B and, since that time, the New Orleans wholesale operation has continued as a branch of Anheuser-Busch. Alan T. Sparkman was the branch manager of A & B and is now manager of this Anheuser-Busch New Orleans branch.

 (c) Bahama Blenders, Ltd. ("Bahama Blenders") -- This is a Bahamian corporation with its principal place of business in Nassau. It is the duly-appointed Anheuser-Busch wholesaler in the Bahamas. At all times relevant to this litigation, Jaffrey Stewart has managed and controlled this distributorship. Bahama Blenders and Todhunter-Mitchell are active competitors in the extensive and lucrative market for alcoholic beverages on Grand Bahama Island.

 3. Anheuser-Busch has a field organization for marketing its beer which is divided into geographical and authority-level areas of responsibility. The country is divided into divisions, each of which, in turn, is divided into districts. The Anheuser-Busch personnel primarily concerned in 1969 with the matters in this action were as follows:

 (a) Sales to National Brands and to Bahama Blenders were the immediate responsibility of the Miami district, headed by District Manager Robert M. Martin. Martin reported to Division Manager James R. Nesbitt in Tampa, who in turn reported to Southeastern Regional Manager Robert F. Stockhausen in Atlanta.

 (b) Sparkman, as manager of the Anheuser-Busch New Orleans branch, reported to the Division Manager in Little Rock, Arkansas, who in turn reported to the Regional Manager in Houston, Texas. Joe A. Loyd was Assistant to the Regional Manager in Houston.

 (c) The Regional Managers for Atlanta and Houston, and other Regional Managers, reported to Charles S. Aulbert, vice-president (Operations), who was in headquarters in St. Louis, Missouri.

 4. Beginning in late 1968, Todhunter-Mitchell went into the business of importing American and European beers into the Bahamas. It made arrangements to buy Pabst, Schaeffer, and Carling beer from a Florida wholesaler beginning in January of 1969. Although Todhunter-Mitchell did purchase and import a variety of American beers, it was unable to buy Budweiser. Ship chandlers and other wholesalers in the United States were approached by Todhunter-Mitchell, but it could not obtain Budweiser from them.

 5. During the early part of February, 1969, Arthur Pincourt, Sr., had a series of conversations with Messrs. Blank and Florman of National Brands. Pincourt wanted to buy 10,000 cases of Budweiser from National Brands. Mr. Florman relished the idea of selling such a large quantity of beer and obtaining a customer the size of Todhunter-Mitchell, but explained to Pincourt that it would first be necessary to contact Mr. Busch, a top executive in the Anheuser-Busch home office, in order to receive permission for such a sale. Florman told Pincourt that he would contact the Anheuser-Busch home office in order to determine if the sale to Todhunter-Mitchell in the Bahama Islands was acceptable policy. Two or three weeks later, Florman reported back to Pincourt and informed him that Mr. Busch had vetoed the sale of Budweiser beer to Todhunter-Mitchell in no uncertain terms.

 6. In late February of 1969, Todhunter-Mitchell made another effort to purchase Budweiser from National Brands. A. Kenneth Pincourt, Jr., the president of Todhunter-Mitchell, called Marvin Florman of National Brands and informed him of Todhunter-Mitchell's renewed interest in purchasing large quantities of Budweiser for the Bahama distributorship. Florman expressed a willingness to sell Budweiser to Todhunter-Mitchell but again indicated in the conversation that it was necessary to obtain the approval of Anheuser-Busch before the sale of the beer could be consummated.

 7. Todhunter-Mitchell did not place a formal written order with National Brands for a certain quantity of beer. The offer to purchase consisted solely of oral solicitations that Todhunter-Mitchell wanted to buy substantial quantities of Budweiser beer from National Brands.

 8. In late summer of 1969, Anheuser-Busch diverted to New Orleans a load of Busch-Bavarian beer destined for a Biloxi, Mississippi, wholesaler. This was done because hurricane Camielle wiped out the Mississippi accounts that would have bought the beer. The New Orleans branch manager (Sparkman) was asked by Anheuser-Busch representative Joe Loyd to see if he could sell it.

 9. Sparkman contacted Joseph M. Lichtenstein, Jr., the president of Streiffer, and asked him whether he would buy some 1,900 cases of Busch-Bavarian at a price of $1,95 per case. Lichtenstein contacted Pincourt and he agreed to buy the Busch-Bavarian but only if Sparkman would sell Budweiser also. Lichtenstein called Sparkman back and told him that he would take the Busch-Bavarian but that he wanted Budweiser also; Sparkman agreed. Lichtenstein then ordered 975 cases of Busch-Bavarian and 975 cases of Budweiser. The order was eventually changed to include 675 cases of Busch-Bavarian and 1,275 cases of Budweiser. The beer was shipped to the Bahamas on September 14 and October 20, 1969.

 10. Jaffrey Stewart of Bahama Blenders noticed shipments of Budweiser and Busch-Bavarian from sources other than his own during September, 1969. He promptly complained by telephone to Anheuser-Busch District Manager Martin and asked if he could do anything about it. Stewart also complained in person to Division Manager Nesbitt, who happened to be in Freeport on a market visit.

 11. At Nesbitt's instructions, Martin went to Freeport to determine the source of the Budweiser beer being sold in the Bahamas by distributors not authorized by Anheuser-Busch. Martin testified that he was concerned, stating that, "I had never experienced anything like this before, where some other wholesaler brought in our product." Martin visited various customers of Todhunter-Mitchell and searched their trash to examine discarded cases of beer. He also bought some cans of Budweiser from the same customers. Martin sent the empties and the end flaps from the cartons to Nesbitt, since they have a code showing the date of manufacture and the particular brewery from which they were shipped.

 12. During Martin's personal visit to Freeport, Stewart told him that Bahama Blenders was extremely unhappy that Anheuser-Busch products were coming into the Bahama market without the knowledge of Bahama Blenders. Stewart asked Martin if there was any way of stopping the flow of the beer. Martin expressed his desire to cooperate with the wholesaler and told him to address his complaint in writing to Division Manager Nesbitt in Tampa, Florida.

 13. Nesbitt made a telephone report to his superior, Regional Manager Stockhausen, in Atlanta and then sent Stockhausen a written report dated September 30, 1969, summarizing Martin's investigation. The following are pertinent excerpts from that report:


"As reported to you in a telephone conversation last week, some Budweiser and Busch 12 oz. cans have found their way to Freeport. After a personal investigation by Division Manager Bob Martin, the following are his findings.


* * *


"The company which is attempting to sell this beer is Tod-Hunter (sic). This company bottles Scotch, whiskey, gin, rum, etc. They buy from time to time some Carling and Regal beer; however, they are not considered bona fide beer distributors. They have expressed an interest in Anheuser-Busch and other brands as well. Also, they do not belong to the local Association in Freeport.


"The company is an over-the counter (sic) stock company, and the principal stockholders reportedly live in the West Palm Beach area. Mr. Martin reports that some of the owners are very close friends of Mr. Marvin Florman of National Brands.


"The Tod-Hunter (sic) Company is selling the Budweiser and the Busch at the same price, which is $7.75 [per case]. This is 50 cents under the Bahamas Blenders price on Budweiser.


* * *


"Mr. Martin forwarded to this office one of each of the cans and end flaps from the master cartons, showing the codes. This material is being held in this office for further disposition awaiting your recommendations."

 14. By letter dated October 17, 1969, Stewart made a written complaint to Nesbitt, the relevant parts of which are as follows:


"As you are aware, we are having tremendous problems of late due to the fact that one of our competitors, Todhunter-Mitchell & Co., Ltd., have been bringing in Budweiser and Busch illegally into Grand Bahama and offering it at prices below those set by the Bahamas Liquor Association.


* * *


"I have been trying to think who might have supplied the product to Todhunter, other than American Distributors, and two names come to my mind, one being a ship's chandler company in New Orleans called Dave Streiffer, this being a fully-owned subsidiary of Todhunter-Mitchell; also Florida Export Tobacco Company, ship's chandlers in Miami.


"I do not know what you can do to help us in this matter but I do request most sincerely that you investigate with all urgency as we are in an invidious position having a bootlegger in the area supplying our customers with product at prices below those set by your wholesaler. Moreover, we are considerably upset to find him with stocks of Busch when I have been trying to get prices and delivery of this product from you for the last 2 years. "

 15. Nesbitt forwarded Stewart's letter to Stockhausen on October 20, 1969. In his letter of transmittal, Nesbitt noted that, "The additional information included in Mr. Stewart's letter should enable us to pursue this matter more proficiently." He also promised to send Stockhausen Todhunter's price list, mentioning that Todhunter's list indicates that "several major brands including Schlitz, Pabst, Carling, Regal, etc. are available at reduced prices." *fn1"

 16. By letter dated October 23, 1969, Stockhausen forwarded all of the previous correspondence to his superior, Vice President/Marketing (Beer) Aulbert in St. Louis, stating:


"Please refer to the attached correspondence, in particular the letter written by Mr. J. Stewart of Bahamas Blenders, Ltd., Nassau, providing us with information and details regarding shipments of our brands of beer which are being made to the Bahamas illegally. These are now estimated to be some 4000 cases of Budweiser and Busch combined which are being sold at a price lower than those established by our legitimate wholesaler in these islands.


"We have pursued every lead possible in attempting to identify the source of this product, particularly from within the state of Florida or the Port of Miami-West Palm Beach. Nothing has been discovered. At this point, we are suggesting that the beer is probably coming through the Port of New Orleans.


"We look upon this as a very serious matter and will appreciate any help you can provide in attempting to curtail the availability and shipment to the Bahamas."

 17. On October 27, 1969, Aulbert wrote to Messrs. Rideout and Parker, Regional Managers in Houston and Newark, respectively, sending copies to Stockhausen and to each of the three brand managers in St. Louis. Aulbert stated:


"Attached is a memorandum from Bob Stockhausen covering a serious problem that he has in the Bahamas.


"We would appreciate very much each of you gentlemen checking into this situation to find out if, by any chance, the source of this problem could be coming from somewhere in your respective areas of responsibility.


"After you have thoroughly investigated this situation, please advise us accordingly with a carbon copy to Mr. Stockhausen."

 18. Considerable efforts were made by Anheuser-Busch employees to trace the shipments of Budweiser beer to Todhunter-Mitchell. Loyd, the Assistant to Houston Regional Manager Ed Rideout, called Sparkman and requested that he check his files to see if he had anything to do with the shipment of approximately 3,500 cases of Busch-Bavarian and Budweiser to the Bahamas. An examination of the invoices of the New Orleans branch distributor revealed that Sparkman had, in fact, sold the beer that was ultimately shipped to Todhunter-Mitchell in the Bahamas. Loyd was subsequently informed of Sparkman's implication in the sale of the beer to Todhunter-Mitchell in the Bahamas.

 19. Loyd subsequently recontacted Sparkman and instructed him that he should not sell beer for distribution into the Bahamas. The reason given by Loyd was that Anheuser-Busch was in short supply of beer. Sparkman responded, "Okay, I won't do it." Since the time Sparkman received such instructions from Loyd, A & B has not sold Anheuser-Busch beer to the Streiffer ship's chandler for shipment to the Bahamas.

 20. Anheuser-Busch plants were shut down because of a labor dispute from May 27 to June 29, 1969, and no beer was produced or shipped from its plant during that period. It is estimated that the loss from this shutdown was approximately two million barrels of beer from total sales in 1969 of approximately 18,712,000 barrels. The effects of the strike lasted until December of 1969; a shortage of supply of Anheuser-Busch products was felt throughout the distribution system until that time.

 21. About the first part of November, Sparkman called Lichtenstein and told him that, on instructions from St. Louis, he could not sell Streiffer any more beer for shipment to the Bahamas. The refusal persists to this day. Sparkman did mention that Streiffer could order beer for its ship's chandler trade.

 22. After the beer had been traced to Streiffer, Stewart requested of the people at Anheuser-Busch that such an incident not occur again. Anheuser-Busch explained to Stewart that the distribution of beer from the various wholesalers was very difficult to control and gave no guarantee that it would not happen again. Anheuser-Busch did indicate that an effort would be made to prevent further unauthorized importation of Budweiser into the Bahamas.

 23. National Brands' interest in dealing with Todhunter-Mitchell is summarized in Florman's own words as follows in a March 9, 1970, report he sent to the Anheuser-Busch Legal Department in St. Louis:


"Pursuant to your conversation with Jerry Blank last Tuesday re: Todhunter-Mitchell (sic) and Co., Ltd., I will try to search my memory and recap.


"Arthur Pincourt, (I believe he is Chairman of the Board of T.M. & Co.), made several approaches to me requesting us to sell him large quantities of Busch and Budweiser beers. This was followed by a number of phone calls from Kenneth Pincourt, (Arthur's son), who is president of T.M. & Co. Kenneth Pincourt told me they were buying truckloads of Bud and Busch and that we were quite foolish not to sell them as it would be a convenience to them to purchase the beer from us at West Palm Beach, since they were shipping from West Palm Beach to Freeport where they are headquartered.


"I have known Arthur Pincourt for many years, and my relationship with Arthur and Kenneth had been friendly and cordial. I explained to the Pincourts that selling beer to them and knowing that the beers would be shipped out of our territory into another distributors (sic) territory was against the Brewery's policy. However, through their ships chandler's operation, further, that they had interest in eight ships chandlering operations along the east coast and gulf coast. In addition, they belong to an association of ships chandlers that have pledged to help each other. In any event, they would be able to purchase Bud and Busch beers.


"In August, after the strike, Kenneth called me several times and wanted to purchase several truckloads of beer. Again, he repeated that he was getting the beer and it was foolish of us not to sell him. I called Bob Stockhausen in Atlanta and relayed this conversation to him. ' Stock ' told me definitely not to sell T.M. & Co., that Anheuser-Busch was aware of the situation but did not know where the beer was coming from. I suggested to Stockhausen that the source probably was T.M.'s ships chandler's operations in New Orleans, which, at the time, was a brewery operation. This was very disturbing to us because we could have been selling T.M. for several years, and didn't, and now T.M. was getting beer from a brewery branch operation during the time that we were short and on allocation.


"This brings us pretty much up-to-date. I have had several recent telephone calls, just social and friendly -- the sort of thing like -- 'how about getting together when you are up this way ' -- (they maintain a West Palm Beach office).


"I am attaching copies of the correspondence that we have in our file. You will note in my letter of August 28th, that I make no mention of our products. In addition to these letters, there were several handwritten notes 'From the desk of A. Arthur Pincourt ' requesting our getting together re: purchase of beer.


"If I can be of any further help, please advise.


"Sincerely," (Emphasis added.)

 24. Todhunter-Mitchell's inability to purchase beer from National Brands stems directly from the refusal of Anheuser-Busch to approve such a sale to a distributor which is in direct competition with a duly-appointed Anheuser-Busch distributor in the Bahama Islands.

 25. Anheuser-Busch, through its representatives, directed and ordered National Brands and A & B not to sell Budweiser to Todhunter-Mitchell. The refusal of Anheuser-Busch to allow the two distributors to sell beer in wholesale quantities to Todhunter-Mitchell for future resale in the Bahamas was motivated by an interest in eliminating all price competition for its products theretofore distributed and sold by Bahama Blenders, its duly-appointed distributor in the Bahama Islands.

 26. In the four years before Martin retired, Anheuser-Busch had never had the problem in the Miami District of a wholesaler selling to somebody else's territory.

 27. During Nesbitt's tenure as Division Manager at Tampa, there was only one situation other than the Todhunter-Mitchell situation where one Anheuser-Busch wholesaler sold in another's territory. It occurred when a tavern in the territory of the Orlando wholesaler, which had been sending its own truck to the Ocala wholesaler's place of business to buy beer, called up Nesbitt and sought permission to have the Ocala wholesaler deliver to the tavern in the Orlando wholesaler's territory. Nesbitt called the Orlando wholesaler and told him that the customer had no intention of buying from him and suggested that he contact the Ocala wholesaler to see if they could work out some sort of equitable agreement for further purchases of beer.

 28. During the time that Stockhausen has been Regional Manager, Anheuser-Busch wholesalers in that region have not sold in each other's territory.

 29. Each wholesaler in the eastern region has a copy of the map of his designated territory.

 30. Anheuser-Busch salesmen have access to the wholesaler's records which shows the names and addresses of the wholesaler's customers and the sales history of each account.

 31. In Loyd's experience as Assistant to the Regional Manager, there was only one incident of a distributor in the eastern region servicing someone out of his territory. This happened when an eastern chain store which had one of its stores in a neighboring town elected to buy all of its beer from a smaller wholesaler in that neighboring town, trucking the beer back into Houston to its stores there. The wholesaler in Houston complained to Anheuser-Busch, after unsuccessfully trying to work the problem out with the smaller wholesaler. Anheuser-Busch personnel visited the smaller wholesaler. Thereafter, the smaller wholesaler did not sell beer to the Houston chain store.

 Findings of Fact as to Damages

 32. The time period in which damages have been sustained begins in February of 1969 and continues to the present. Todhunter-Mitchell attempted to purchase Budweiser beer from National Brands in February of 1969, but Anheuser-Busch prevented such a sale to the plaintiff. To date, Todhunter-Mitchell has been unable to purchase Budweiser from an Anheuser-Busch distributor in the United States.

 33. If not precluded by the restraint imposed by Anheuser-Busch, plaintiff would have purchased wholesale quantities of beer from National Brands in Miami, Florida. Due to the close proximity of this wholesaler to the plaintiff's business in the Bahamas and the expressed interest of National Brands in selling beer to Todhunter-Mitchell, this distributor is the most logical source for the purchase of Budweiser by the plaintiff. The purchase of beer from the New Orleans distributor, through the plaintiff's wholly owned ship's chandler's business located there, represents a single, isolated transaction precipitated by the necessity of dispensing large quantities of beer diverted to the New Orleans wholesaler. Although further purchases from the New Orleans distributor by Todhunter-Mitchell was certainly possible, National Brands appears to be the most reasonable source of purchase of Budweiser by Todhunter-Mitchell.

 34. National Brands' regular price to resellers for Budweiser from 1969 to the present has been $4.80 per case for no-return bottles and $4.95 per case for cans. These prices include Federal tax of $.65 per case and Florida State taxes of $.96 per case.

 35. Absent the territorial restraints of National Brands, Todhunter-Mitchell would have purchased Budweiser from National Brands at the above-stated prices. There is no evidence on the present record in which the Court could reasonably conclude that National Brands would sell beer to Todhunter-Mitchell at prices different from those charged other purchasers.

 36. Because the beer would be shipped out of the country, the $.65 per case Federal tax and $.96 per case state tax would not be applicable. For this reason, the total of $1.61 in taxes must be deducted from the prices charged by National Brands in computing Todhunter-Mitchell's lost profits. This reduction would establish a price of $3.19 per case for no-return bottles and $3.34 per case for cans.

 37. The average price, computed by taking into account the Todhunter-Mitchell mix of cans and bottles, is $3.33 per case.

 38. From February until July of 1969, the cost of ocean transportation, duty, and stamp tax totaled $1.17. From August of 1969 to the present, this cost would amount to $3.17 per case.

 39. In addition to the above-enumerated expenses, Todhunter-Mitchell would have incurred a selling and delivery cost of approximately $.25 per case. This figure is computed on the basis of Todhunter-Mitchell selling between 10,000 and 20,000 cases per year. This expense would be relatively constant over the five-year period in question here.

 40. During the period of February to July of 1969, plaintiff's total cost of sales would have been $4.75 per case. From August of 1969 to the present, the total cost of sales would be $6.75 per case. The total cost of sales must be deducted from the selling price to determine lost profits per case. 41. The average price per case at which Todhunter-Mitchell would have sold Budweiser in the Bahamas is as follows: Period Price Per Case February to April, 1969 $5.15 May to July, 1969 5.26 August, 1969 to December, 1970 8.24 January to July, 1971 8.35 August, 1971, to the present 7.96


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