Ex parte BTC Wholesale Distributors, Inc., [Ms. SC-2022-0881, Dec. 15, 2023] __ So. 3d __ (Ala. 2023). The Court (Cook, J.; Shaw, Bryan, and Mitchell, JJ., concur; Mendheim, J., concurs in part, concurs in the result in part, and dissents in part; Parker, C.J., and Stewart, J., concur in part and dissent in part; Sellers, J., concurs in part and dissents in part, which Wise, J. joins) grants in part and denies in part a mandamus petition filed by the defendants challenging the Jefferson Circuit Court’s orders in limine excluding all evidence and argument of or relating to (1) their justification and competitor’s privilege defenses, (2) their “antitrust” or illegality defense, and (3) mitigation of damages under PepsiCo’s Transshipment Enhancement Program (“TEP”).
Buffalo Rock Company, Inc. has sole distribution rights for PepsiCo products in Alabama pursuant to a 1951 exclusive bottling agreement (“EBA”). Ms. *3. The defendants are wholesalers who sell a variety of PepsiCo products to convenience stores and other small stores (“C-stores”) in Alabama. Defendants do not purchase those products from Buffalo Rock or Pepsico. When those wholesalers ignored demands from Buffalo Rock to terminate sales of PepsiCo products in Alabama, Buffalo Rock filed suit against them alleging claims for tortious interference with a business relationship, tortious interference with a contract, and conspiracy. Ms. *2.
The Court reiterates “[i]t is well settled that ‘[a] trial court’s disallowance of a party’s affirmative defense[s] is reviewable by a petition for a writ of mandamus.’ Ex parte Buffalo Rock Co., 941 So. 2d 273, 277 (Ala. 2006).” Ms. *11. The Court first addresses the justification defense and notes that “nothing in the Restatement test endorses Buffalo Rock’s contention that selling products within a plaintiff’s territory gives rise to liability for tortious interference whenever the plaintiff has exclusive distribution rights pursuant to a contract with the manufacturer of the products.” Ms. *25. Accordingly, the Court holds the jury should determine whether the defendants are liable by balancing the justification factors found in §767 of the Restatement. Ms. **27-28.
Competitor’s privilege applies when “the defendant causes a third person not to enter into a prospective contract with another who is his competitor.” Tom’s Foods, Inc. v. Carn, 896 So. 2d 443, 457 (Ala. 2004). The Court concludes the jury should decide the issues raised by this defense because Buffalo Rock did not have contracts with the defendants’ C-store clients, and they did not cause PepsiCo to violate its contract with Buffalo Rock. Ms. **34-35.
The Court also vacates the trial court’s order barring introduction of evidence of payments received by Buffalo Rock under PepsiCo’s TEP program pursuant to which Buffalo Rock could have received payments from PepsiCo for transshipping, defined as sales by other wholesalers of PepsiCo products in Buffalo Rock’s exclusive territory. The Court notes that Buffalo Rock had a duty to mitigate its damages and holds “the defendants are entitled to present evidence related to Buffalo Rock’s decision not to mitigate its damages through the TEP to argue for a reduction [of] the amount of any damages that the jury may choose to award to Buffalo Rock should it prevail below.” Ms. **41-42.
The antitrust/illegality defense related only to Buffalo Rock’s equitable claim seeking injunctive relief. Ms. *45. The Court reiterates that “[p]urely legal claims, as well as factual issues common to the legal and equitable claims, must be determined by the jury; the remaining issues are then to be decided by the trial court.” Ms. *45, citing Ex parte Taylor, 828 So. 2d 883 (Ala. 2001). Consequently, the “trial court was within its discretion to exclude evidence, testimony, and arguments regarding such [antitrust] defense during the jury-trial portion of this action.” Ms. *47.
Justice Sellers dissents, joined by Justice Wise, on the justification/competitor’s privilege defenses because allowing these defenses would undermine the purpose of the Soft Drink Interbrand Competition Act, 15 U.S.C. § 3501 et seq, which is to foster interbrand competition. Chief Justice Parker also dissents from issuance of the writ as to the justification/competitor’s privilege defenses. Ms. **51-52. The Chief Justice questions whether there can be justification for intrabrand competition in an exclusively licensed territory and also concludes the petitioners have an adequate remedy by way of appeal as to these defenses. Ms. *52.