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TODHUNTER-MITCHELL & CO. v. ANHEUSER-BUSCH

February 27, 1974

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


Bechtle, D.J.


The opinion of the court was delivered by: BECHTLE

Introduction

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.

 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.

 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 ...


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