In Re Olympia Brewing Co. Antitrust Litigation

415 F.Supp. 398 (1976)

In re OLYMPIA BREWING COMPANY ANTITRUST LITIGATION.

No. 242.

Judicial Panel on Multidistrict Litigation.

June 21, 1976.

Before JOHN MINOR WISDOM, Chairman, and EDWARD WEINFELD, EDWIN A. ROBSON, WILLIAM H. BECKER, JOSEPH S. LORD, III, STANLEY A. WEIGEL^[*] and ANDREW A. CAFFREY, Judges of the Panel.

OPINION AND ORDER

PER CURIAM.

On February 28, 1975, Olympia Brewing Company acquired essentially all the assets of Theodore Hamm Company. Soon after this acquisition, Olympia began a large-scale cancellation program of many of the distribution contracts that Hamm previously had made with various independent distributors. Nearly 250 Hamm distributors were terminated in the process and replaced by Olympia-owned distributors and former Hamm distributors. In addition, Olympia completely discontinued distribution of Hamm brands in the Southeastern United States.

Many of the Hamm distributors that Olympia did not elect to appoint as distributors of "Hamm's" and other beer brands subsequently initiated several actions against Olympia or Hamm or both alleging illegal conduct in connection with the acquisition and plaintiffs' terminations. As a result, 55 actions are presently pending in four federal districts: 52 in the District of Minnesota; and one each in the Western District of Washington, the Southern District of California and the District of South Carolina.

The Washington action and some or all of the Minnesota actions contain allegations under Sections 1 and 2 of the Sherman Act, Section 7 of the Clayton Act, and various state statutes, together with claims for breach of contract. Some Minnesota plaintiffs include alleged violations of Sections 2 and 3 of the Clayton Act as well as tortious interference with contractual relationships. Both Olympia and Hamm are defendants in all the Minnesota and Washington actions. Although the Washington plaintiffs and some of the Minnesota plaintiffs did not request injunctive relief, many of the Minnesota plaintiffs did seek such relief and currently are distributing Hamm's beer pursuant to temporary injunctions entered by the district court. The Court of Appeals for the Eighth Circuit has upheld the injunctions as they apply to Olympia, vacated them as they related to Hamm, and stated that the district court is to determine these actions on the merits "with all convenient speed."

The Minnesota actions have been consolidated for pretrial purposes, and the parties agree that substantial discovery has taken place therein. They represent that Olympia and Hamm have produced thousands of documents, which have been copied by plaintiffs and are currently being computerized in Minnesota; and that both plaintiffs and defendants have responded to numerous interrogatories. Defendants have only recently begun their document discovery, however; and few, if any, depositions have been taken. Little or no discovery apparently has occurred in the Washington actions.

The California action was commenced only against Olympia by two former Hamm distributors who were also directors and shareholders of Hamm at the time of its acquisition by Olympia. The complaint originally sought recovery for Olympia's alleged violation of Section 2 of the Sherman Act and Section 7 of the Clayton Act, as well as for fraud and breach of contract. The court has denied plaintiffs' requests for a preliminary injunction, and has granted a partial summary judgment dismissing the contract claim and the Section 7, Clayton Act allegations. The court certified the dismissal of the Clayton Act claim for appeal pursuant to 28 U.S.C. § 1292(b), and this issue presently is before the Court of Appeals for the Ninth Circuit. Thus, only the Sherman Act and fraud counts remain at issue in the district court.

The action pending in the District of South Carolina originally was brought against both Hamm and Olympia as a class action on behalf of all former South Carolina Hamm distributors who were not appointed as distributors by Olympia when it decided to forego marketing Hamm's beer in the Southeast. This action alleged that: (1) Hamm and Olympia fraudulently induced plaintiffs to contract and expend funds and efforts to distribute Hamm's beer; (2) defendants conspired for their own gain in reckless disregard of plaintiffs' interests; and (3) Olympia wrongfully induced Hamm to breach its contracts with plaintiffs. Unlike the other actions in this litigation, the complaint does not allege violations of federal antitrust laws. The South Carolina court recently dismissed all claims against Olympia for lack of in personam jurisdiction, leaving Hamm as the sole defendant.

Pursuant to 28 U.S.C. § 1407(c)(i), the Panel issued an order to show cause why the actions in this litigation should not be transferred to a single district for coordinated or consolidated pretrial proceedings. Plaintiffs in the California and South Carolina actions favor transfer to Minnesota; the California plaintiffs state that the Western District of Washington also would be a suitable transferee forum. Defendant Hamm favors transfer of only the Washington action to the District of Minnesota. Plaintiffs in 22 of the 52 Minnesota actions agree that only the Washington action should be transferred to Minnesota, but they argue that transfer should be solely for coordinated pretrial proceedings under Section 1407. Defendant Olympia and plaintiffs in the Washington action and 30 of the Minnesota actions oppose any Section 1407 transfer in this litigation; should the Panel order transfer, however, the former plaintiffs favor the Western District of Washington as the appropriate transferee district, while the latter plaintiffs suggest the District of Minnesota.

We find that the actions pending in the District of Minnesota and the Western District of Washington share common questions of fact and that transfer of the Washington action to the District of Minnesota for coordinated or consolidated pretrial proceedings pursuant to Section 1407 with the actions pending there will best serve the convenience of the parties and witnesses and promote the just and efficient conduct of this litigation. We also find that transfer of the actions pending in the Southern District of California and the District of South Carolina will not, on balance, serve the convenience of the parties and witnesses or promote the just and efficient conduct of the litigation and, accordingly, we deny their transfer.

I. The Washington and Minnesota Actions

All parties generally agree that the Minnesota and Washington actions share common questions of fact relating to defendants' conduct and intentions in the acquisition of Hamm's assets. Nevertheless, the Washington plaintiffs assert that individual factual questions predominate since the actions involve disparate geographic beer markets. The Washington plaintiffs as well as the other parties opposed to transfer of the Washington action to Minnesota contend that because discovery is far more advanced in Minnesota than in Washington, transfer would serve only to delay the pretrial proceedings in Minnesota until discovery in the Washington action is brought to a comparable point. This delay, it is argued, would frustrate the mandate of the Eighth Circuit that the Minnesota actions be brought to trial "with all convenient speed." Moreover, these parties state that counsel already have been successful in voluntarily coordinating discovery in this litigation, and they contend that any possibility of duplicative discovery can be avoided by continued cooperation among counsel.

We are persuaded that the Minnesota and Washington actions share significant common questions of fact concerning, inter alia, defendants' conduct and intentions pertaining to the acquisition of Hamm's assets, which obviously is the fountainhead of this litigation, and that these common questions predominate over any unique factual issues relating to different geographic product markets. We are not persuaded, however, that transfer of the Washington action to the District of Minnesota for coordinated or consolidated pretrial proceedings will delay the processing of the actions already pending in that forum. To the contrary, we see no reason why the ongoing discovery cannot continue expeditiously while at the same time the Washington plaintiffs harmoniously blend their pretrial preparation into that of the Minnesota plaintiffs to the overall benefit of everyone concerned. Indeed, we note that counsel representing 23 California distributors stated during oral argument that although the actions on behalf of these plaintiffs were filed in Minnesota relatively late, they had no trouble catching-up with the previously completed discovery. Transcript at 18-19. The transferee judge, moreover, may enter appropriate orders making all discovery already taken in the Minnesota actions available to the Washington plaintiffs, thereby avoiding unnecessary duplication and inconvenience. See In re Koratron Patent Litigation, 327 F.Supp. 555, 560 (J.P.M.L.1971); Manual for Complex Litigation, Parts I and II, § 3.11 (rev. ed. 1973). And while we laud the spirit of cooperation exhibited by counsel in this litigation, assigning these actions to a single judge will ensure the avoidance of duplicative discovery and concomitantly serve the desired goal of conserving judicial effort. The precise manner and extent of coordination or consolidation among these actions is, of course, left entirely to the discretion of the transferee judge. See In re Equity Funding Corporation of America Litigation, 375 F.Supp. 1378, 1384 (J.P.M.L.1974).

II. The California Action

Most parties are opposed to inclusion of the California action in Section 1407 proceedings because it apparently is in the final stages of pretrial preparation, and because a significant portion of that action — the Section 7, Clayton Act claim — is currently before the Court of Appeals for the Ninth Circuit. Some parties also argue that since the California plaintiffs are former shareholders and directors of Hamm, their action is substantially different from the other actions in this litigation. The California plaintiffs, on the other hand, contend that the two counts remaining in this action before the district court raise factual issues common to the rest of the actions and therefore transfer is appropriate in order to avoid duplication of discovery. Plaintiffs add that if dismissal of the Clayton Act claim is reversed on appeal, additional commonality will arise.

We were advised by counsel for Olympia during oral argument that one plaintiff had dismissed the remaining two counts on the day before the Panel hearing and that the other individual plaintiff stated before the California court that if he failed on appeal, he would abandon his case. Transcript at 14. On the basis of the record before us, we have no reason to doubt these assertions. Thus, in balancing all the contentions of the parties, we believe that this action in its present posture may well be approaching its final stages and, as a result, it should not be included in the transfer we are herewith ordering.

III. The South Carolina Action

The South Carolina plaintiffs maintain that even though their action does not involve antitrust allegations, it should be embraced in the Section 1407 proceedings because many of the underlying factual issues are common with the other actions. All remaining parties who mention the South Carolina action, however, argue that this action should not be transferred because its factual allegations are different from those involved in the remainder of this litigation.

Upon close analysis of the complaint in the South Carolina action in relation to those in the other actions, we believe that the South Carolina action is substantially distinct to such a degree that the just and efficient conduct of this action as well as the litigation taken as a whole can best be achieved by leaving the former alone. Unlike the rest of the actions in this litigation, the South Carolina action focuses on defendant Hamm's conduct in connection with the fact that Hamm had undertaken expansion into South Carolina relatively recently and after the acquisition Olympia decided to discontinue that expansion.

IV. The Transferee Forum

Although the Western District of Washington has been suggested as the transferee forum for this litigation, the District of Minnesota is clearly the most appropriate choice. The vast majority of the actions are already pending there. Pretrial proceedings in the actions in that district are moving along in a coordinated fashion and are further advanced than those in the Washington action. And in addition, most parties agree on Minnesota's preferability.

IT IS THEREFORE ORDERED that the action listed on the following Schedule A and pending in the Western District of Washington be, and the same hereby is, transferred to the District of Minnesota and, with the consent of that court, assigned to the Honorable Charles R. Weiner, sitting by designation under 28 U.S.C. § 292(d), for coordinated or consolidated pretrial proceedings pursuant to 28 U.S.C. § 1407 with the actions already pending there and listed on Schedule A.

IT IS FURTHER ORDERED that transfer of the actions listed on Schedule A and pending in the Southern District of California and the District of South Carolina be, and the same hereby is DENIED, without prejudice to the right of any party to seek reconsideration at a later time if it feels future circumstances so warrant.

SCHEDULE A
Western District of Washington
August Distributing Co., Inc., et       C.A. No. C75-372S
al. v. Olympia Brewing Co., et al.
District of South Carolina
Martschink Beer Distributors,           C.A. No. 75-1713
Inc., etc. v. Theodore Hamm Co.,
et al.
Southern District of California
John Lenore & Co., et al. v.            C.A.No. 75-0233-T
Olympia Brewing Co.
District of Minnesota
Stewart J. Nephew v. Theodore           C.A. No. 5-75-62
Hamm Co., et al.

Douglas R. Zilz v. Theodore             C.A. No. 5-75-125
Hamm Co., et al.
J. A. Dady, etc. v. Olympia             C.A. No. 4-75-200
Brewing Co., et al.
Lammers Beverage Co. v. Olympia         C.A. No. 4-75-279
Brewing Co., et al.
Doyle's Interstate Beverage Co.         C.A. No. 4-75-280
v. Olympia Brewing Co., et al.
Sojourn Inc. v. Olympia Brewing         C.A. No. 4-75-292
Co., et al.
Gilbert Baumeister v. Olympia           C.A. No. 4-75-293
Brewing Co., et al.
Don Kerr, Inc. v. Olympia Brewing       C.A. No. 4-75-294
Co., et al.
Pritzl Beverage Inc. v. Olympia         C.A. No. 4-75-295
Brewing Co., et al.
Decker Distributing, Inc. v. Olympia    C.A. No. 4-75-296
Brewing Co., et al.
Ament & Sons, Inc. v. Olympia           C.A. No. 4-75-297
Brewing Co., et al.
Jerry O'Connell Dist., Inc. v.          C.A. No. 4-75-298
Olympia Brewing Co., et al.
Geo. Walter Dist. Ltd. v. Olympia       C.A. No. 4-75-299
Brewing Co., et al.
Raphael J. Bowar v. Olympia             C.A. No. 4-75-300
Brewing Co.
Lind Distributing Co., Inc. v.          C.A. No. 4-75-301
Olympia Brewing Co., et al.
Hamm's Rochester Distributing           C.A. No. 4-75-306
Co., Inc., et al. v. Olympia Brewing
Co., et al.
S&S Distributors, Inc. v. Olympia     C.A. No. 4-75-309
Brewing Co., et al.
Lee Hess & Sons, Inc. v. Olympia        C.A. No. 4-75-326
Brewing Co., et al.
Hamm Brew Sales Co. v. Olympia          C.A. No. 4-75-327
Brewing Co., et al.
Krumrei Beverage Distributing           C.A. No. 4-75-338
Co. v. Olympia Brewing Co., et al.
East Town Distributors Co. v.           C.A. No. 4-75-339
Olympia Brewing Co., et al.
Schwan Wholesale Co., Inc. v.           C.A. No. 4-75-340
Olympia Brewing Co., et al.
Johnston's Inc. v. Olympia Brewing      C.A. No. 4-75-341
Co., et al.
H&H Distributing Co. v. Olympia       C.A. No. 4-75-342
Brewing Co., et al.
Russ Maita Distributors, Inc. v.        C.A. No. 4-75-389
Olympia Brewing Co., et al.
Union Beverage, Inc. v. Olympia         C.A. No. 4-75-390
Brewing Co., et al.
Berutti Distributing Co., Inc. v.       C.A. No. 4-75-391
Olympia Brewing Co., et al.
Ray Distributing Co. v. Olympia         C.A. No. 4-75-392
Brewing Co., et al.
Magnani Distributing Co. v.             C.A. No. 4-75-393
Olympia Brewing Co., et al.
Loren Rausser v. Olympia Brewing        C.A. No. 4-75-394
Co., et al.
H & H Distributing Co. v. Olympia       C.A. No. 4-75-395
Brewing Co., et al.
R&S Distributing Co. v. Olympia       C.A. No. 4-75-396
Brewing Co., et al.
Pasadena Beverage Corp. v.              C.A. No. 4-75-397
Olympia Brewing Co., et al.
Clark Miller Distributing Inc.          C.A. No. 4-75-398
v. Olympia Brewing, Co., et al.
Eagle Distributing Co., Inc. v.         C.A. No. 4-75-399
Olympia Brewing Co., et al.
Redding Beverage Corp. v. Olympia       C.A. No. 4-75-400
Brewing Co., et al.
United Beverage Distributors v.         C.A. No. 4-75-401
Olympia Brewing Co., et al.
H&M Distributing Co. v. Olympia       C.A. No. 4-75-401
Brewing Co., et al.
H&M Distributing Co. v. Olympia       C.A. No. 4-75-402
Brewing Co., et al.
Inaccas, Inc. v. Olympia Brewing        C.A. No. 4-75-403
Co., et al.
Medoncino Distributing Co. v.           C.A. No. 4-75-404
Olympia Brewing Co., et al.
Bottomley Distributing Co., Inc.        C.A. No. 4-75-405
v. Olympia Brewing Co., et al.
Gate City Beverage Distributors,        C.A. No. 4-75-406
Inc. v. Olympia Brewing Co.,
et al.
Rex Distributing Co. v. Olympia         C.A. No. 4-75-407
Brewing Co., et al.
Mountain Distributing Co. v.            C.A. No. 4-75-408
Olympia Brewing Co., et al.
Consolidated Beverage Distributors      C.A. No. 4-75-409
v. Olympia Brewing Co., et al.
Bert G. Gianelli Distributing Co.       C.A. No. 4-75-410
v. Olympia Brewing Co., et al.
Starr Brothers, Inc. v. Olympia         C.A. No. 4-75-572
Brewing Co., et al.
R&M Distributing Co. v. Olympia         C.A. No. 4-75-573
Brewing Co., et al.
Mark Twain Beverage Co., Inc.           C.A. No. 4-75-574
v. Olympia Brewing Co., et al.
Frank Lassandro v. Olympia              C.A. No. 4-75-575
Brewing Co., et al.
Gorski Distributors, Inc. v. Olympia    C.A. No. 4-75-576
Brewing Co., et al.
Astro Beverage Corp. v. Olympia         C.A. No. 4-75-411
Brewing Co., et al.
Needham Distributing Co., Inc.          C.A. No. 4-75-285
etc. v. Olympia Brewing Co.
et al.

NOTES

[*] Judge Weigel was unable to attend the Panel hearing and, therefore, took no part in the consideration or decision of this matter.