The opinion of the court was delivered by: Caputo, District Judge.
On May 12, 1997, plaintiffs Beer & Pop Warehouse, Inc; Case
Beer & Soda Outlet, Inc.; Jet Distributors, Inc.; and Q.F.A.,
Inc. t/b/a "Beer World" filed a complaint alleging that
subsections 447(a)(2), (a)(3), (b), and (c) of the Pennsylvania
Liquor Code violate section 1 of the Sherman Act, 15 U.S.C. § 1.
Plaintiffs seek an injunction against the enforcement of the
above provisions of the Code. On June 24, 1997, defendants John
E. Jones, III, the Chairman of the Pennsylvania Liquor Control
Board ("LCB"); Robert Fohl, a member of the LCB; Robert P.
Kaskiel, the Director of the LCB's investigative unit; and Paul
J. Evanko, the Commissioner of the Pennsylvania State Police
filed a motion to dismiss. On October 17, 1997, the Honorable
William W. Caldwell denied defendants' motion to dismiss. (See
Doc. # 22.)
On May 15, 1998, plaintiffs filed a motion for summary
judgment. On June 29, 1998, defendants filed a motion for summary
judgment. Because I find that the plaintiffs have produced
evidence of a "threatened" anti-trust injury, the defendants'
motion for summary judgment will be denied. In addition, because
I find that subsections 447(a)(2), (a)(3), (b), and (c) of the
Pennsylvania Liquor Code violate section 1 of the Sherman Act,
15 U.S.C. § 1, plaintiffs' motion for summary judgment will be
granted. Defendants will be permanently enjoined from enforcing
subsections 447(a)(2), (a)(3), (b), and (c) of the Pennsylvania
The plaintiffs are "retailers," "distributors," and "importing
distributors" under the Pennsylvania Liquor Code, 47 Pa.Stat. §§
1-101 to 8-803 the statutory scheme dealing with the distribution
in the Commonwealth of beer and liquor. (Answer ¶ 13).
Pennsylvania's scheme of the sale and distribution of malt
liquor is a three tiered structure which consists of the
manufacturers, distributors and importing distributors, and
retailers. Manufacturers are licensed
by the LCB to manufacture, sell, and transport malt or brewed
beverages. See 47 Pa.Stat. § 1-102.*fn1 Distributors are
licensed by the LCB to purchase only from Pennsylvania
manufacturers and importing distributors, and to resell the malt
or brewed beverages in quantities of not less than one-hundred
twenty-eight (128) ounces. See id.*fn2 Importing distributors
are similar to distributors, but they may purchase from
manufacturers outside the Commonwealth. See id.*fn3 Retailers
are licensed by the LCB to sell the malt or brewed beverages.
See id.*fn4 The manufacturers must sell to the distributors
and the distributors must buy from the manufacturers. See id.
The distributors sell to the retailers who must buy from the
distributors. See id.
The Commonwealth's regulation of liquor and alcohol is very
different as compared with the regulation of malt and brewed
beverages. Compare 47 Pa.Stat. § 2-207, with § 4-431. The
purchase of liquor and alcohol is made by the LCB "at the lowest
price and in the greatest variety reasonably determined." See
47 Pa.Stat. § 2-207(a). Prices of liquor and alcohol are fixed at
the wholesale and retail level. See id. § 2-207(b). In
contrast, malt and brewed beverage prices are set by the
wholesaler (distributor), but the LCB regulates the ability of
the distributor to raise and lower the prices of malt and brewed
beverages. See 47 Pa.Stat. § 4-477.
This is the third attempt by the Commonwealth of Pennsylvania
within the last ten years to regulate the price of malt and
brewed beverages, this court having struck down the two previous
attempts of the Commonwealth to do so. See Stroh Brewery Co. v.
Walp, No. 1:Cv-93-937 (M.D.Pa. April 4, 1994); Anheuser-Busch,
Inc. v. Goodman, 745 F. Supp. 1048 (M.D.Pa. 1990). The
Commonwealth's stated purpose in regulating malt and brewed
beverages is "to discourage increased consumption and
irresponsible conduct resulting from impulse buying, price
promotion or the natural elasticity of demand relative to price."
47 Pa.Stat. § 4-447(a).
There are several exceptions to subsection 447(a)(2). Prices
may be reduced to reflect a tax increase. See id. §
4-447(a)(2)(ii). In addition, if a competitor lowers its price on
a brand of malt or brewed beverage, a manufacturer, importing
distributor, or distributor may reduce its price on the same or
similar brand of malt or brewed beverage. See id. §
4-447(b).*fn7 The price reduction, however, cannot be greater
than the competitor's price reduction and the price must be
maintained for at least 120 days after the competitor's price
became effective or after the competitor's price is lawfully
rescinded. See id.
Moreover, under subsection 447(c), a manufacturer, importing
distributor, or distributor "may change the price . . . if market
conditions or other good cause support the change." See id. §
a price is changed under subsection 447(c), the LCB must be
notified within forty-eight (48) hours of the change so that the
LCB can schedule a hearing to determine if the price was changed
for good cause. See id. If, after a hearing, the LCB determines
that the price was not changed for good cause, a manufacturer,
importing distributor, or distributor must refund the difference
to all importing distributors, distributors, or retail licensees
who purchased from them. See id.
A. Summary Judgment Standard
Federal Rule of Civil Procedure 56(c) provides that the moving
party is entitled to summary judgment if "the pleadings,
depositions, answers to interrogatories, and admissions on file
together with the affidavits, if any, show there is no genuine
issue as to any material fact and that the moving party is
entitled to judgment as a matter of law." Fed.R.Civ.P. 56. A fact
is "material" if proof of its existence or nonexistence might
affect the outcome of the suit under the applicable law.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 91 L.Ed.2d 202 (1986). "Facts that could alter the outcome
are material facts." Charlton v. Paramus Bd. of Educ.,
25 F.3d 194, 197 (3d Cir.), cert. denied, 513 U.S. 1022, 115 S.Ct. 590,
130 L.Ed.2d 503 (1994). "Summary judgment will not lie if the
dispute about a material fact is `genuine,' that is, if the
evidence is such that a reasonable jury could return a verdict
for the nonmoving party." Anderson, 477 U.S. at 248, 106 S.Ct.
Initially, the moving party must show the absence of a genuine
issue concerning any material fact. Celotex Corp. v. Catrett,
477 U.S. 317, 329, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). All
doubts as to the existence of a genuine issue of material fact
must be resolved against the moving party, and the entire record
must be examined in the light most favorable to the nonmoving
party. White v. Westinghouse Elec. Co., 862 F.2d 56, 59 (3d
Cir. 1988); Continental Ins. Co. v. Bodie, 682 F.2d 436 (3d
Cir. 1982). Once the moving party has satisfied its burden, the
nonmoving party "must present affirmative evidence to defeat a
properly supported motion for summary judgment." Anderson, 477
U.S. at 256-57, 106 S.Ct. 2505. Mere conclusory allegations or
denials taken from the pleadings are insufficient to withstand a
motion for summary judgment once the moving party has presented
evidentiary materials. Schoch v. First Fidelity
Ban-corporation, 912 F.2d 654, 657 (3d Cir. 1990). Rule 56
requires the entry of summary judgment, after adequate time for
discovery, where a party "fails to make a showing sufficient to
establish the existence of an element essential to that party's
case, and on which that party will bear the burden ...