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The soft drink business in East Texas was a relatively friendly affair when Jerry Dudley started out 40 years ago. Family-owned companies bottled colas and fruit drinks, and sold them to local grocers or mom-and-pop convenience stores. There was competition, but it wasn't cutthroat. There weren't international conglomerates trying to muscle you out of the market, and maybe drive you out of business.
But in the early 1990s, that all began to change. Dudley, president and general manager of Harmar Bottling Co. in Paris, Texas, began seeing his soft drinks nudged from prime shelf space -- even out of stores entirely -- to make way for a competitor's products. He watched local bottlers disappear one by one, losing the struggle to stay in business.
It got so bad that Harmar and some of his fellow independent bottlers banded together and sued the heavyweights of carbonated beverages -- Coca-Cola Enterprises Inc. and Coca-Cola Inc., Pepsico Inc. and Pepsi's bottler, Delta Beverage Group -- claiming that in their zeal to dominate the region's soft drink market, the corporate titans had broken Texas law by engaging in predatory, anticompetitive business practices.
Pepsi settled before trial. Coke -- with its never-say-die litigation strategy -- fought the suit. In 2000, after a six-week trial, a jury in Daingerfield, Texas, found Coca-Cola Enterprises -- a bottling company 40 percent-owned by Coca-Cola -- guilty of breaking state antitrust laws. Although a far cry from the $100 million they were hoping for, Harmar and the other regional bottlers won a $15.6 million judgment. Almost seven years later, they have yet to see a dime.
In late 2006, after sitting on the case for nearly two years, the Texas Supreme Court finally ruled on Coke's appeal of the suit. By a 5-4 vote, the state's highest civil court threw out the verdict.
Reversing a multimillion dollar judgment is not out of character for a court packed with conservative judges, six of them appointed by Gov. Rick Perry before winning pro forma elections. But the legal reasoning that the slim majority used to justify its ruling was so alarming -- and sets such an unappetizing precedent -- that it has spawned incredulity in Texas legal circles.
In effect, the court reviewed the evidence and decided the jury was wrong. It was a remarkable reach beyond the court's usual exercise of power.
Ordinarily, appeals courts give great deference to a jury's conclusions. Jurors, after all, are the ones who hear the witnesses, review evidence, and deliberate the case. A court usually has a compelling reason when it decides to disregard the jury's conclusions.
What that reason might be is not clear in this case. More than a few scholars argue that the state Supreme Court doesn't have a sound legal principle with which to justify its decision. Worse, they fear it opens the door for other Texas courts to begin arbitrarily tossing aside jury verdicts with which they disagree. If the high court continues on this course, they say, the constitutional right to a civil jury trial could be in jeopardy.
Dudley and the bottlers have asked the court to reconsider its decision, because they'd still like to get their money. Law professors from across the state have joined that request, arguing there is now much more at stake then who sells the most diet sodas in East Texas.
"It's elitism versus egalitarianism," says Nelson Roach, who represented Harmar Bottling during trial. "It's whether or not you believe that ordinary people have the capability to collectively judge the facts of the case. There is a movement that has been very hostile to the rights of juries to make decisions, and this case is part and parcel of it."
It started in the early 1990s, Dudley recalls. At the time, local bottling companies competed to sell soft drinks to retailers in Northeast Texas and neighboring swaths of Oklahoma, Arkansas, and Louisiana.
Then the big boys -- Coca-Cola and Pepsi -- arrived and began taking over the market.
In Dudley's Northeast Texas territory, Coca-Cola Enterprises snapped up local bottlers to distribute Coke and Dr Pepper until it accounted for 75 to 80 percent of the total carbonated beverage sales in the region. From its position of market dominance, Coke started putting the screws to Harmar and other small beverage companies.
As Coke moved in, Dudley says, it kept getting harder and harder for the dwindling number of independent bottlers to make a go of it. Coke cut deals with retailers -- called calendar marketing agreements -- that gave preferential treatment to Coke products. Soda companies compete fiercely for the best shelf space and promotions in stores, particularly convenience stores, where they make most of their profits. Harmar products, such as Royal Crown Cola and 7 UP, were being consigned to the bottom shelf in refrigerators and aisles, with little way to announce their presence.
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Anthony Zurcher is a freelance writer and editor living in Austin.
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