647 F. App'x 733
9th Cir.2016Background
- Plaintiffs (Steven Edstrom and eight other beer purchasers) sued to enjoin ABI’s acquisition of Modelo, alleging the deal would violate Section 7 of the Clayton Act by lessening competition in the U.S. beer market.
- Under the revised transaction, ABI buys Modelo but grants Constellation an irrevocable, exclusive 10-year license to import and sell Modelo brands in the United States; ABI cannot sell Modelo in the U.S. during that period.
- Plaintiffs alleged ABI would control Constellation through operational support, supplies, and transition services, enabling anticompetitive conduct (e.g., price influence).
- The transaction agreements (including a Transition Services Agreement and Interim Supply Agreement) specify limits on ABI’s decision-making over the Piedras Negras plant, restrict disclosure of competitively sensitive pricing information, and set prices for supplies ABI provides to Constellation.
- The district court dismissed the complaint under Rule 12(b)(6); plaintiffs’ post-judgment Rule 60 motion was denied. The Ninth Circuit affirmed dismissal and denial of relief from judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the acquisition violates Section 7 by increasing market concentration | The deal (and ABI’s role) would effectively increase ABI’s control/power over U.S. Modelo sales, lessening competition | ABI’s sale plus a 10‑year exclusive license to Constellation means ABI will not increase U.S. market share or concentration | Dismissed: no plausible prima facie showing of increased concentration |
| Whether ABI can control Constellation to exercise market power | ABI will make Constellation a “puppet” via operational support, supply pricing, and transition services | Agreements and facts do not show how services or supply prices would allow ABI to influence Constellation’s retail pricing | Dismissed: allegations lack factual enhancement to plausibly show ABI control |
| Whether the court may consider the transaction agreements on a 12(b)(6) motion | n/a (Plaintiffs alleged agreement contents) | Agreements are authentic and integral to the complaint; court may consider them without converting to summary judgment | Affirmed: district court properly considered the agreements |
| Whether leave to amend or Rule 60 relief should have been granted | Plaintiffs sought leave to amend and later relief from judgment based on alleged misrepresentations | Defendants argued plaintiffs already had chances to amend and failed to show fraud or new facts warranting relief | Affirmed: denial of leave to amend and denial of Rule 60(b)(3) relief was not an abuse of discretion |
Key Cases Cited
- Saint Alphonsus Med. Ctr.-Nampa Inc. v. St. Luke’s Health Sys., Ltd., 778 F.3d 775 (9th Cir. 2015) (prima facie Section 7 framework requires showing increased market concentration)
- FTC v. H.J. Heinz Co., 246 F.3d 708 (D.C. Cir. 2001) (merger analysis and market concentration principles)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible, not merely possible)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (courts may reject conclusory allegations lacking factual enhancement)
- Branch v. Tunnell, 14 F.3d 449 (9th Cir. 1994) (consideration of documents referenced in the complaint on a Rule 12(b)(6) motion)
- Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008) (standards for dismissal without leave to amend)
- World Wide Rush, LLC v. City of Los Angeles, 606 F.3d 676 (9th Cir. 2010) (district courts’ broad discretion to deny leave to amend, especially after prior amendments)
- Jones v. Aero/Chem Corp., 921 F.2d 875 (9th Cir. 1990) (Rule 60(b)(3) requires clear and convincing evidence of fraud or misconduct)