Enrico's Inc. v. Baxter Rice, Director, Department of Alcoholic Beverage Control Wine & Spirits Wholesalers of Northern California, Inc., a California Association Consolidated Enterprises, Inc., D/B/A Rathjen, a Corporation Juillard, Inc., D/B/A Juillard Alpha Liquor Company, a California Corporation and House of Sobel, a California Corporation

Citation: 730 F.2d 1250Docket: 83-1689

Court: Court of Appeals for the Ninth Circuit; April 12, 1984; Federal Appellate Court

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Enrico's Inc. appeals a district court decision granting summary judgment, which upheld the California Department of Alcoholic Beverage Control's price-posting procedure for wholesale distilled spirits distribution, as established under California Business and Professions Code section 24756 and 4 Cal. Admin. Code section 100. The court found that this procedure did not violate section 1 of the Sherman Act. Enrico's, which operates a café selling distilled spirits, argued that the price-posting requirement, which mandates wholesalers to maintain posted prices for at least 30 days, constituted price-fixing. 

During the proceedings, the California Court of Appeals ruled in Lewis-Westco Co. v. Alcoholic Beverage Control Appeals Board that the price-posting scheme was invalid under the Sherman Act. The district court, however, proceeded to issue a summary judgment favoring the defendants, asserting the constitutionality of Rule 100 despite the state court's ruling. The district court later questioned the mootness of the appeal due to the conflicting state decision and ultimately dismissed the appeal, stating that no case or controversy existed, and did not address the constitutional issue of Rule 100.

On February 3, 1983, the California Supreme Court denied a hearing for the Lewis-Westco case, prompting the Department to seek a stay from the United States Supreme Court, which was denied on March 14, 1983. Subsequently, the Department issued a bulletin indicating it would not enforce Section 24756 of the Business and Professions Code and Rule 100 pending a final legal resolution. In May 1983, a certiorari petition was filed in the U.S. Supreme Court regarding Lewis-Westco, and the present case was accepted for interlocutory appeal but was vacated on July 14, 1983, awaiting the Lewis-Westco outcome. The U.S. Supreme Court denied certiorari on October 3, 1983, making the current case ready for determination.

Amicus curiae, representing the plaintiffs in Lewis-Westco, argued that the case is moot due to the Department's voluntary cessation of the price posting enforcement. Conversely, the appellant contended that this cessation does not ensure future non-enforcement of Rule 100. The court emphasized that its jurisdiction is limited to existing cases or controversies, as per established legal precedent, and that past wrongdoing alone does not warrant injunctive relief. The Department's cessation of enforcement was deemed compelled by the Lewis-Westco ruling rather than voluntary. The court noted it did not see a real or immediate threat of injury to the plaintiffs, which is necessary for a case to be considered active. The appellant referenced an ongoing case, Mutual Wholesale Liquors v. Alcoholic Control Appeals Bd., which could create a risk of conflicting rulings regarding Rule 100, suggesting potential future enforcement by the Department.

The court rejects the argument that decisions from coordinate appellate courts in different districts are not influential, noting that such decisions are often persuasive. It highlights that the California Supreme Court's denial of a hearing on a case can serve as binding authority for other districts. Despite the lack of explicit endorsement from the California Supreme Court, it is unlikely that the Second District will disregard the First District's ruling in Lewis-Westco due to the denial of a hearing. The Department has committed not to enforce the price posting procedure unless certain legal conditions change, leading to the conclusion that enforcement is unlikely to recur. The court cannot grant effective relief to the appellant since reversing the district court would not yield additional benefits beyond those already provided by Lewis-Westco. Furthermore, the court finds it lacks jurisdiction to hear the case because the appellant's claims do not meet the criteria for the 'capable of repetition yet evading review' exception, as there is insufficient likelihood of future enforcement of the pricing policy. While the court acknowledges its duty to consider declaratory relief, it emphasizes that the case or controversy requirement still applies to such actions.

The case is deemed moot for both injunctive and declaratory relief due to several factors: the Department has stopped enforcing the pricing scheme, certiorari was denied in the Lewis-Westco case, and it is likely that the Mutual court will align with the Lewis-Westco decision. Consequently, there is no effective remedy that the court can provide for the plaintiff. The absence of a substantial controversy with the immediacy and reality necessary for a declaratory judgment is noted, referencing Super Tire Eng'g Co. v. McCorkle. The court also clarifies that there is no ongoing state policy that remains unreviewed. The appeal is dismissed as moot, and the district court’s judgment is vacated, instructing the dismissal of the complaint regarding the validity of Rule 100.1.