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POSA, INC. v. MILLER BREWING CO.

March 31, 1986.

POSA, INC., J. Posa, Inc., and Riverside Warehouse, Inc., Plaintiffs,
v.
MILLER BREWING COMPANY, Defendant.



The opinion of the court was delivered by: MISHLER

MISHLER, District Judge.

Plaintiffs in this case are two trucking companies (Posa, Inc. and J. Posa, Inc.) and a warehousing company (Riverside Warehouse, Inc.) all wholly owned by members of the family of F. Joseph Posa ("Posa"). Defendant, Miller Brewing Company ("Miller"), a Wisconsin corporation with its principal place of business in Wisconsin, is engaged in business as a brewer of various brands of beer. From 1977 to 1980 the Posa trucking companies hauled beer from the Miller brewery located in Fulton, New York, to distributors of Miller beer in New York and neighboring states. During this same period the Posa warehousing company stored beer and related dunnage (wooden pallets, empty kegs and used bottles) for Miller and its distributors in a number of warehouses in the Fulton area. In late 1979 Miller stopped doing business with the warehousing company and in April 1980 it barred the trucking companies from its property.

 On April 24, 1981, plaintiffs filed their initial complaint, which enumerated 13 causes of action arising, for the most part, out of the circumstances surrounding this termination of relations. The claims can be broken down into three categories: (1) Counts I-V allege a variety of common law torts including libel and interference with business relations; (2) Counts VI-X allege several breaches of contract; and (3) Counts XI-XIII state civil claims for anti-trust violations. Presently before us are defendant's motion for summary judgment on the tort and anti-trust claims, plaintiffs' cross motion to amend the complaint, for summary judgment on two of the contract claims, for partial summary judgment on the issue of liability on the tort and anti-trust claims, and for a jury trial on the issues not disposed of by these motions.

 FACTS

 In 1976 Miller opened a brewery in the town of Fulton, New York. Miller sells its beer to wholesale dealers, known as distributors, who in turn sell to retail stores, bars and restaurants. Although Miller owns a few of its distributors, most are independent businesses owned by third parties. Beer is shipped from the brewery to the distributors' warehouses by rail or truck. Of the beer that is shipped by truck some is hauled by the distributors' own trucks and some by common carriers. The common carriers are regulated, with respect to interstate hauling, by the Interstate Commerce Commission ("ICC") and, with respect to intrastate hauling, by the New York State Department of Transportation ("DOT"). Whether inter or intra state, a common carrier trucking company must have a hauling license or "authority" issued by the appropriate regulatory agency, which covers the types of products it can haul and the geographic limits to its hauling authority.

 Posa, Inc. first applied to the DOT for authority to service the Fulton brewery shortly after it began production in 1976. Miller supported the application and in 1977 Posa, Inc. received permanent authority from the DOT. As of January 1977 there were, including Posa, 17 trucking companies with authority from the ICC to haul beer interstate from the Fulton brewery of which 14 also had DOT authority for intrastate shipping. In 1977-78 the Posa family began operating Riverside Warehouse, Inc. The warehouse operation eventually consisted of three warehouses in the area which were made available to Miller and its distributors for the storage of beer, dunnage and other supplies.

 Sometime prior to September 13, 1978, Miller determined that Posa had been making some hauls for which it had no DOT authorization. Specifically, Miller found that Posa had transported loads of dunnage, empties and other materials from the brewery to various warehouses in the Fulton area in violation of its DOT license, which only granted Posa the authority to transport such material inbound into the brewery. (Pl.App.Doc. No. 6568). Miller then advised its personnel that they should stop using Posa for shipments other than beer from the brewery as Posa had been operating illegally with respect to shipments of materials (Def.Mem.Ex.C).

 Early in 1979 Miller received a complaint from one of Posa's competitors in the shipping business which alleged that a number of improper activities were going on at the Fulton plant. The accusations for the most part were leveled against Richard Zarski, Miller's traffic manager at the brewery. Posa was accused of improperly inducing Zarski to give it preferential treatment. At about the same time Miller received complaints about Posa from several of its distributors. *fn1"

 In response to these complaints Miller commenced an investigation. On May 25, 1979 there was a meeting between Zarski and several Miller executives. Miller had apparently concluded that there was some substance to the accusations that Zarski had accepted bribes and had knowingly allowed Posa to make illegal hauls and, over Zarski's protestations of innocence, summarily fired him.

 Some time prior to this meeting, in a letter dated May 11, 1979, Miller was asked to cooperate with the DOT in an investigation the Department was conducting into possibly unauthorized transportation of beer by a trucking company from warehouses located in the Fulton area. By letter dated June 4, 1979, the DOT informed the Posas that its investigation indicated that they had been "transporting commodities for the Miller Brewing Company . . . without the necessary operating authority" and that such transportation was in violation of Article 7 of the New York Transportation Law. (Def.Mem.Ex.F). A copy of this letter was also sent to Miller.

 On October 26, 1979 the DOT instituted an administrative proceeding in order to investigate alleged irregularities in the Posas' operations. On January 3, 1980 the DOT brought a civil action in New York State Supreme Court against the Posas claiming numerous violations of the New York Transportation Law by unauthorized shipments from the Fulton brewery and from the Riverside warehouses. The DOT sought to recover a total of over $700,000 in fines. On February 21, 1980 the court issued an order approving a settlement and discontinuance of this lawsuit pursuant to which the Posas were to pay $12,000 to the DOT and to reimburse certain shippers for 504 overcharges made during 1979. (Def.Mem.Ex.I).

 On April 25, 1980 Miller sent a bulletin to its Fulton distributors informing them that the Posas were to be barred from Miller property. The bulletin attached a list of trucking companies that Miller found had "demonstrated their reliability and their willingness to comply with reasonable rules and regulations." The bulletin then went on to inform the distributors that the Posas were not on the list of approved carriers and therefore would not be permitted on Miller property after May 4, 1980.

 Since the beer that was to be shipped by truck was picked up at loading facilities on Miller's premises, the ban effectively ended Posa's ability to haul beer from the Fulton brewery for the distributors. Apparently much of Posa's business involved servicing the Miller distributors thus the shut-out had a great financial impact. One distributor responded to the bulletin with a letter to Miller inquiring why the Posas, who did 90 percent of the distributors' shipping and had given excellent service, were no longer permitted on Miller property. (Def.Mem.Ex.K). Miller's answer basically repeated the wording of the original bulletin.

 Meanwhile, on April 29, 1980, the DOT took action on a license application by the Posas which sought, inter alia, to extend the geographic limits to the original grant of authority. In his decision on the application the Administrative Law Judge ("ALJ") noted that the DOT withdrew the administrative proceeding that had been commenced on October 26, 1979. The ALJ's decision was to extend the scope of authority to a limited degree. *fn2" Plaintiffs assert that this decision "cleared" Posa and that under the newly expanded authority the hauls that previously were considered by Miller to have been illegal, would now be permissible.

 In 1981 Posa, Inc. sued a Miller distributor in New York State Supreme Court to recover charges for shipments of beer from the Fulton brewery to the Riverside warehouse and from the warehouse to the distributor's place of business. The state court held that Posa was not entitled to recover for the shipments from the warehouse to the distributor because those shipments were outside the authority granted in Posa's license from the DOT.

 DISCUSSION

 1. The Motion to Amend the Complaint

 The amended complaint makes a number of additions and deletions to the factual allegations in the original complaint. The additions appear to be for purposes of correcting insufficiently stated claims, the deletions have the effect of dropping certain clearly unprovable claims or theories from the case. Specifically, the amendments would make the following changes in the original complaint: (1) Count II, which stated a claim of tortious interference in contractual relations is withdrawn; (2) Count III is slightly modified by adding to the claim of interference with pending orders to ship Miller products from the Fulton brewery, the allegation that other pending orders, these from Eden, North Carolina, were likewise interfered with; (3) Counts XI and XII, which alleged a concerted refusal to deal and/or group boycott in violation of § 1 of the Sherman Act, are deleted; they are replaced with other anti-trust claims that are based on a theory of an illegal tying arrangement. Defendant has no objection to the deletions but argues that the tying claims and revised interference with contract claims should not be allowed.

 Rule 15(a), Fed.R.Civ.P. provides that leave to amend "shall be freely granted where justice so requires." If the plaintiff has at least colorable grounds for relief, leave to amend shall be granted unless the plaintiff is guilty of undue delay, bad faith, or if defendant would be unduly prejudiced. S.S. Silberblatt, Inc. v. East Harlem Pilot Block, 608 F.2d 28, 42 (2d Cir.1979). We are not persuaded by defendant's argument that it would be unduly prejudiced by the proposed amendments. Defendant claims it is prejudiced because it will have to expend additional time and money in refuting the revised claims and in redeposing plaintiffs' principals. However these arguments are deprived of much of their force in the light of the fact that defendant has already made a substantial response to the amended complaint in its Reply Memorandum in Opposition. There is no indication that plaintiffs have engaged in bad faith or dilatory tactics, rather it appears that facts uncovered during discovery have convinced plaintiffs that the underlying transactions and occurrences support somewhat differing theories of liability than those articulated in the initial complaint. Plaintiffs' request to amend is therefore granted.

 2. The Request for a Jury Trial

 A party seeking a jury trial of any issue so triable as of right is required to serve a "demand therefor . . . not later than 10 days after service of the last pleading directed to such issue." Fed.R.Civ.P. 38(b). The failure to make such demand constitutes a waiver. Fed.R.Civ.P. 38(d). As the instant plaintiffs did not demand a jury trial in their complaint, within 10 days of service of defendant's answer, or indeed at any time during the next four years, they have thus waived their right. While Fed.R.Civ.P. 39(b) does allow parties, by motion, to make an untimely demand for a jury trial, the courts have only limited discretion to grant such a request. Noonan v. Cunard Steamship Co., 375 F.2d 69, 70 (2d Cir.1967). It is the rule in this circuit that "[u]ntimely requests for jury trial must be denied unless some cause beyond mere inadvertence is shown." Galella v. Onassis, 487 F.2d 986, 996 (2d Cir.1973). Amending a complaint to assert new issues revives a party's right to a jury trial, however, the revived right only applies to genuinely new issues not relating to the same general area of dispute raised in the original complaint. Lanza v. Drexel & Co., 479 F.2d 1277, 1310 (2d Cir.1973).

 In this case plaintiffs have given no reason to justify their failure to demand a jury trial within the time frame provided by Rule 38(b). Nor has the right to request a jury trial been revived by the amended complaint as no new issues have been raised. Although the amended complaint changes the theoretical basis for the anti-trust claims from a concerted refusal to deal to an illegal tying arrangement, the underlying facts that must be proven, as well as the basic legal issue of whether defendant has acted in such ...


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