This is an appeal from a Superior Court summary judgment for the Alcoholic Beverages Control Commission (commission) affirming a decision of the commission. Pursuant to its decision, the commission had ordered Franklin and Robert Naifeh (doing business as Central Liquor Company, hereinafter Central) to case and desist from selling to M.H. Gordon & Son, Inc. (Gordon), or to any other Massachusetts wholesaler, "alcoholic beverages the price of which fails to correspond exactly with the affirmed prices in effect under [G.L.c. 138, §§ 25B and 25D]."
The plaintiffs commenced an action in the Superior Court for judicial review of the commission's order, pursuant to G.L.c. 30A, § 14. A Superior Court judge denied
The pertinent facts are as follows. Gordon does not buy alcoholic beverages directly from Joseph E. Seagram & Sons, Inc. (Seagram), in Indiana. Gordon instead chose to buy Seagram's products from Central, which is located in Oklahoma. Central buys the Seagram's products from a Seagram's distribution center in Oklahoma and then ships them to Gordon. The commission found that the price charged by Central to Gordon was the sum of (1) the Massachusetts affirmed price; and (2) a service, handling, and shipping charge incurred by the manufacturer of the alcoholic beverage (Seagram) in shipping its products from its distillery in Indiana to Oklahoma, and in handling the products once there.
The plaintiffs advance three arguments in their appeal: (1) that the difference between the Massachusetts affirmed price and that paid by Gordon to Central was merely a legitimate "laid-in cost" and not part of the price and that, therefore, there was no violation of §§ 25B and 25D; (2) that §§ 25B and 25D, as written and as applied, are in conflict with the Sherman Act, 15 U.S.C. § 1 et seq. (1976), and are thus unconstitutional;
The commission has raised several threshold issues which must be addressed before we can reach the substance of this case. We shall address such issues in the context of our discussions of each argument presented by the plaintiffs.
1. Violation of G.L.c. 138, §§ 25B & 25D. The commission argues, initially, that the plaintiffs waived their claim that they did not violate §§ 25B and 25D.
In his memorandum of decision, the trial judge stated that the "plaintiff does not argue in his brief that there was not a violation of General Laws Chapter 138, Sections 25B and 25D, but more appropriately bases his motion for summary judgment on the unconstitutionality of the affirmative law." The general rule is that an issue not raised in the trial court cannot be argued for the first time on appeal. See, e.g., Royal Indem. Co. v. Blakely, 372 Mass. 86, 88 (1977); Trustees of the Stigmatine Fathers, Inc. v. Secretary of Administration & Fin., 369 Mass. 562, 565 (1976); Milton v. Civil Serv. Comm'n, 365 Mass. 368, 379 (1974). The judge's statement, standing alone, is not enough, however, to invoke the rule. There is extensive evidence that the issue of the violation of the statute was raised below. We point to (1) the complaint, which alleged that the decision of the commission was unsupported by substantial evidence; (2) the judge's list of issues in his memorandum of decision wherein the first issue is whether "the plaintiffs have violated General Laws Chapter 138, Section 25B and Section 25D"; and (3) the judge's conclusion, based upon a review of the evidence before the commission, that the plaintiffs did, in fact, violate §§ 25B and 25D.
The record persuades us that the issue whether the plaintiffs violated the statute has not been raised for the first time
Turning to the merits, the plaintiffs argue that the higher price paid by Gordon to Central merely represents the shipping costs incurred in transporting the products from Indiana to Oklahoma. Charging the higher price in this context, the plaintiffs continue, is expressly permitted by G.L.c. 138, § 25D (d), wherein differentials in price are permitted if due to differences in "the actual cost of delivery." We disagree.
The plaintiffs accurately cite to the statute, but the statutory exemption for delivery costs does not apply here. Gordon bought products from Central for the affirmed price plus an added charge. That this added charge can be traced to the cost of shipping the alcoholic beverages to Central in Oklahoma is not material. Some of the costs of the products could certainly be traced to the cost of shipping grain to Seagram in Indiana, or to other costs of doing business. It is the price paid by Gordon to Central that the Legislature addressed in the statute, and we must deal with that here. That price was above the affirmed price and thus violated the language of G.L.c. 138, § 25B (d). See M.H. Gordon & Son v. Alcoholic Beverages Control Comm'n, 371 Mass. 584, 592 (1976). The plaintiffs violated the statute.
2. Sherman Act. The commission first argues that, since the plaintiffs failed to raise an antitrust claim before the commission, they were precluded from raising it before the Superior Court and that we should not allow them to argue it here. The general rule is that it is too late to raise a claim before a reviewing court if the point had not been raised before the administrative agency. Charron's Case, 331 Mass. 519, 523 (1954). However, for several reasons we
As Justice Black stated in Hormel v. Helvering, 312 U.S. 552, 557 (1941), "[r]ules of practice and procedure are devised to promote the ends of justice, not to defeat them." Justice will be served by consideration of the antitrust claim for two reasons. First, both the plaintiffs and the commission cite the commission's decision in another case, wherein the commission, in discussing § 25B, stated, "We leave to the court to determine whether this runs afoul of the Sherman Act." United Liquors, Inc. v. M.H. Gordon & Son, slip op. at 3 (Alcoholic Beverages Control Commission, December 1, 1980). The commission has thus made it clear that it will not rule on this issue. The courts are, therefore, the only forum for such a judgment.
Second, it is at least arguable that the decision in California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980), modified the law with respect to the Sherman Act as it relates to the facts of the instant case. The Midcal decision was rendered after the decision of the commission and prior to the plaintiffs' motion for summary judgment. Under such circumstances, where new interpretations of law may have materially altered the result of the commission's decision, we are inclined to allow a previously unadvanced issue to be raised before the court.
The commission next argues that Gordon is barred from raising the Sherman Act claim by the doctrine of res judicata, more currently known as issue preclusion. Restatement (Second) of Judgments § 27 (1982). The commission points to M.H. Gordon & Son v. Alcoholic Beverages Control Comm'n, 371 Mass. 584 (1976), as the case where
We need not enter into a prolonged discussion concerning whether the Sherman Act claim could have been litigated in the prior M.H. Gordon case. Rather, we point to the fact that Central was not a party in that case. See generally Restatement of Judgments § 93(b) (1942); Rudow v. Fogel, 376 Mass. 587 (1978). As such, Central, at least, is not barred by any notion of issue preclusion from litigating the Sherman Act claim.
The plaintiffs argue that the scheme set up by the interplay between §§ 25B and 25D and the commission's decision in this case make out a violation of the Sherman Act. The commission counters that its application of the statutes is immune from regulation by virtue of the "State action" exemption to the antitrust laws.
It has been long established that some business transactions and some State regulations, which otherwise would be subject to antitrust laws, are immune from antitrust scrutiny pursuant to the "State action" exemption. Parker v. Brown, 317 U.S. 341 (1943). Under Parker v. Brown, supra, and its progeny, activity which is clearly articulated and affirmatively expressed as State policy and actively supervised by the State is "State action" and thus immune. Parker v. Brown, supra. Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975). Bates v. State Bar of Ariz., 433 U.S. 350
In Parker, the Court reviewed a system established by California for the price maintenance of raisins. The Court held, first, that Congress did not intend to preempt the field of State-sanctioned anticompetitive activity. Parker v. Brown, supra at 350-351. Emphasizing that pursuant to California's statutory and regulatory scheme the State had to approve the program and enforce it, the Court held that the Sherman Act did not apply.
Important gloss was not added to Parker until the 1970's. In Goldfarb v. Virginia State Bar, supra, the Court held that a State must compel the challenged conduct before the doctrine would apply. In Bates v. State Bar of Ariz., supra at 361, the Court said that the doctrine of State action applies if the private party "acts as the agent of the [State] under its continuous supervision." In California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., supra, the Court stated that Parker v. Brown, supra, and subsequent decisions established two standards for antitrust immunity: "First, the challenged restraint must be `one clearly articulated and affirmatively expressed as state policy'; second, the policy must be `actively supervised' by the State itself." Midcal, 445 U.S. at 105, quoting from Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410 (1978).
We have no doubt that the Commonwealth's scheme, as articulated by §§ 25B and 25D, satisfies the first part of the Midcal test. The plaintiffs do not question this conclusion. It is clear that the Commonwealth has a strong policy with respect to the prohibition of price discrimination against Massachusetts consumers. See M.H. Gordon & Son v. Alcoholic Beverages Control Comm'n, supra at 593.
Whether the statutory scheme under examination here passes the second part of the Midcal test requires closer examination.
As in the California scheme, it is not the Commonwealth but private parties who set prices. G.L.c. 138, § 25D (a). And, as in California, the Commonwealth may impose penalties for violating the statute. G.L.c. 138, § 25D (e). But the similarity between the two schemes ends there. While the commission ordinarily has no direct control over alcoholic beverage prices, in some instances, if not inconsistent with the purposes of the statute, the commission may allow such beverages to be sold at specific, approved prices different from the affirmed prices. G.L.c. 138, § 25B (d). M.H. Gordon & Son v. Alcoholic Beverages Control Comm'n, supra at 590. Thus, as we stated in the first M.H. Gordon & Son case, the "commission is... the final arbiter of the price at which alcoholic beverages are sold by suppliers to Massachusetts wholesalers." M.H. Gordon & Son, 371 Mass. at 595. Furthermore, we believe that by ordering that the price of an alcoholic beverage sold to a Massachusetts wholesaler may not, other than in exceptional circumstances, be higher than the price paid by a wholesaler
3. Commerce clause. The plaintiffs argue, finally, that §§ 25B and 25D impose an unconstitutional burden on interstate commerce. We decline to reach this issue, as it is abundantly clear that it was not raised at the trial court and appears here an afterthought. Unlike the claim that the plaintiffs did not violate the statute, nowhere in the record