As we reported earlier, the Sixth Circuit has had a busy year with no fewer than five cases involving the beer and wine industry. In the last two weeks, the Court has issued two decisions involving purported terminations of wholesale distributorships governed by Ohio law. A third case involving purported termination of Ohio beer wholesalers by Miller Brewing Company and Coors Brewing Company remains pending before the Sixth Circuit. (Beverage Distributors, Inc. v. Miller Brewing Co).
In Tri-County Wholesale Distributors v. Wine Group, Inc., Case No. 10-4202, the Court affirmed a preliminary injunction in favor of the distributors against the Wine Group (the third-largest wine manufacturer in the United States). The Court noted that the distributors demonstrated a “near certainty” of success on the merits, which meant that analysis of the other factors for a preliminary injunction were unnecessary. However, the Court did note its agreement with the trial court’s observation that the public interest was served by the injunction, because “[g]iven the unique nature of alcoholic beverages, which are a blessing to many, but a curse to more than a few, the Court feels less strongly that knocking a quarter off the price of MD 20/20 would provide a measurable benefit to the public.”
In coming to this decision, the Court rejected the manufacturer’s position that the mere existence of potentially conflicting case law was not enough to doom the distributors’ request for a preliminary injunction. Instead, the Court explained that the likelihood of success factor “contemplates a weighing of the parties’ chances at trial by inquiring as to the likelihood of success, rather than its mere possibility.”
The second case, Bellas Co. v. Pabst Brewing Co., Case No. 11-3417, was decided on July 11, 2012. There, the Sixth Circuit affirmed summary judgment in favor of the distributors because Pabst did not comply with the terms of its written contracts with distributors. Those contracts said that Pabst was required to give 60 days’ notice of termination, but Pabst sent termination notices that said they were effective upon receipt. Pabst claimed that notices were valid because it considered the “successor manufacturer” statute to trump the written contracts, and the statute did not provide for notice prior to any termination.
The Court strongly disagreed and held that the contract terms still applied because they were additional, consistent terms:
Defendant provides no support for these contentions [that the contract terms are irrelevant in light of the statute], probably because it would be impossible to find any. There is obviously no support for the breathtaking proposition that a state law invalidates non-conflicting private contract provisions relating to the subject matter addressed by the state law. And, as a rule, nothing prohibits parties from contracting for greater protections than those provided by statute.
Dave Alexander and Emily Root of Squire Sanders represent the distributor plaintiffs/appellees in the Pabst and Wine Group cases and represent one of the distributor plaintiffs/appellees in the pending case involving Miller and Coors.