Brooke Group Ltd. v. Brown & Williamson Tobacco Corporation

PETITIONER: Brooke Group Ltd.
RESPONDENT: Brown & Williamson Tobacco Corporation
LOCATION: Superior Court of the District of Columbia

DOCKET NO.: 92-466
DECIDED BY: Rehnquist Court (1991-1993)
LOWER COURT: United States Court of Appeals for the Fourth Circuit

CITATION: 509 US 209 (1993)
ARGUED: Mar 29, 1993
DECIDED: Jun 21, 1993

ADVOCATES:
Phillip Areeda - on behalf of the Petitioner
Robert H. Bork - on behalf of the Respondent

Facts of the case

Question

Media for Brooke Group Ltd. v. Brown & Williamson Tobacco Corporation

Audio Transcription for Oral Argument - March 29, 1993 in Brooke Group Ltd. v. Brown & Williamson Tobacco Corporation

William H. Rehnquist:

We'll hear argument next in No. 92-466, Brooke... Brooke Group Limited v. Brown & Williamson Tobacco Corporation.

Mr. Areeda, you may proceed.

Phillip Areeda:

Mr. Chief Justice, and may it please the Court:

The jury in this case found predatory price discrimination by respondent Brown & Williamson, in violation of the Robinson-Patman Act.

And--

William H. Rehnquist:

That predatory price violation was discrimination among its wholesalers.

Phillip Areeda:

--Yes, Your Honor.

The form of the... the form of the discrimination was in rebates to wholesalers designed not to be passed on to consumers.

William H. Rehnquist:

Brown & Williamson wholesalers.

Phillip Areeda:

Brown & Williamson wholesalers.

In fact, the wholesalers were not brand specific, but to wholesalers with whom it... to whom it sold, yes.

William H. Rehnquist:

And how... did it find how that hurt those... that discrimination hurt your clients?

Phillip Areeda:

Yes, Your Honor.

The... this discrimination resulted in net prices to B&W that were below its average variable cost.

These prices below average variable cost, these rebates, had to be met by Liggett in order to retain the patronage of the wholesalers on whom it depended.

William H. Rehnquist:

So you had wholesalers doing business both with Brown & Williamson and with Liggett.

Phillip Areeda:

Yes, sir.

Anthony M. Kennedy:

But as I understand the instructions, the jury could have found in your favor even if it made no finding that the sales were below average variable cost.

Phillip Areeda:

No, Your Honor, I think the instructions--

Anthony M. Kennedy:

Or is that the argument in this case?

Phillip Areeda:

--That's the argument of the other side.

The instructions, fairly read, did require the jury to find that B&W engaged in below-cost pricing with a reasonable prospect of recoupment before it could find that there was the injury to competition that it did find.

Furthermore, B... the B&W experts in court admitted that the pricing was below average variable cost.

To be sure, they sought to draw the string from that admission by introducing alleged tax savings, but there's no evidence... the brief of the other side cites no evidence at all of any realized tax savings.

So--

Anthony M. Kennedy:

And is it your theory of the case that this is part of your burden, to show that it was below average variable cost?

Phillip Areeda:

--Yes, Your Honor, we do.

We accept the burden of showing that prices were discriminatory, below average variable cost, and were undertaken with a reasonable prospect of recoupment.

Antonin Scalia:

I don't understand.

Discriminatory, in what respect were they discriminatory here?